Skip to main content

Full text of "Proceedings of the ... annual meeting of the Fire Underwriters' Association of the Pacific"

See other formats

The Liverpool & London ft Globe h fa, 



Fire Underwriters' Association 



San Francisco, February 20th and 21st, 1894. 

Printed by Order of the Association. 



Insurance and Banking Printing Co., 
San Francisco. 


\J fW «./ 

ooo. / 






. . . Herbert Folger 6 

. V. Carus Driffield io 

. . . Stephen D. Ives 12 

on . . Franklin Bangs 20 

. . . Frank H. Swett 26 

.... Edward Brown 35 

iociation . . Geo. P. Low 44 

Committee 52 


. . . Louis Weinmann 62 

Not to be taken from the Library L. Fuller, R. P. Fabj 67 

. . . E. W. Carpenter 70 

Ben. J. Smith 74 

.... Calvert Meade 76 

'dress .... Committee 81 

Committee 85 

The Press as an Adjuster V. Carus Driffield 91 

Adjustment of Partial Losses R. W. Osborn 94 

Report of Committees in 

California Knapsack Geo. F. Grant 124 

Annual Banquet 145 

Proceedings During the Year 149 

List of Members 153 


* 368.1 
F51 67-04 

Fire underwriters' 
association of the 

i..-.„a.u, and Banking p rin Pacific Proceedings. 

San Francisco. 1894-1897. 

ooo. / 

free -^ m 




Eighteenth. Annual Meeting. 


Annual Beport of Secretary - Treasurer R. W. Osborn 3 

Beport of Library Committee ~ Herbert Folger 6 

Beport of Executive Committee V. Carus Driffield 10 

Address of the President Stephen D. Ives 12 

Classification by Pacific Insurance Union . . Franklin Bangs 20 

Insurable Interest Frank H. Swett 26 

Insurance vs. Underwriting Edward Brown 35 

Underwriters International Electric Association . . Geo. P. Low 44 

Interior Wiring Committee 52 

Special Contracts Anon 54 

What the Times Demand Louis Weinmann 62 

Bureau of Investigation J. L. Fuller, R. P. Fabj 67 

Use and Abuse of Compacts E. W. Carpenter 70 

Value of Statistics Ben. J. Smith 74 

Observations Calvert Meade 76 

Beport of Committee on President's Address .... Committee Si 

Apportionment of Losses in Oregon Committee 85 

The Press as an Adjuster V. Carus Driffield 91 

Adjustment of Partial Losses R. W. Osborn 94 

Beport of Committees m 

California Knapsack Geo. F. Grant 124 

Annual Banquet 145 

Proceedings During the Year 149 

List of Members 153 





President. ------ STEPHEN D. IVES 

Vice-President. - - - - - - R. V. WATT 

Secretary and treasurer. R. W. OSBORN 



California Knapsack. - GEO. F. GRANT. Editor. 

Fire Underwriters' Association 



Tuesday, February 20, 1894. 
The meeting was called to order by President Stephen B. Ives, at 
ten o'clock A. M. 

The following members were present: 

Geo. F. Ashton. 
A. A. Andre, 
J. J. Agard, 
Frank M. Avery, 
H. K. Belden, 
H. C. Boyd, 
J. M. Beck, 
R. G. Brush, 
A. M. Brown, 
Franklin Bangs, 
W. J. Callingham, 
E. W. Carpenter, 
J. W. G. Cofran, 
H. A. Craig. 
Geo. D. Dornin, 
Jas. H. De Veuve, 
V. C. Driffield, 
S. V. Du Bois, 
A. G. Dugan. 

S. D. Ives. 
Franz Jacoby, 

C. Mason Kinne. 
W. H. Lowden, 
L. F. Lamping, 
J. D. Maxwell, 

D. E. Miles, 
Louis Mel, 

J. H. Morrow, 
R. C. Medcraft, 
Geo. H. Mendell, Jr.. 
J. H. McKowen, 
W. O. Morgan, 
T. J. McCarthy, 
R. H. Naunton, 
Peter Outcalt, 
R. W. Osborn, 
T. E. Pope, 
A. G. Ridling, 


W. S. Duval. 
Henry T. Fennel. 
Wm. Frank. 
E. P. Farnsworth, 
B. Faymonville. 
R, P. Fabj, 
J. L. Fuller. 
W. H. Gibbons. 
Geo. F. Grant. 
A. R. Gunnison. 
H. M. Grant. 
Alfred R. Grim. 
M. J. Green. 
O. N. Hall, 
J. R. Hillnian. 
W. R. Hopkins, 
W. H. Hill. 
J. K. Hamilton. 
H. G. Halsey. 

Wm. Sexton. 
Geo. W. Spencer. 
Frank H. Swett. 

B. J. Smith, 

C. A. Stuart. 
H. H. Smith. 
Chas. S. Spinney. 
B. D. Smalley. 
Sydney H. Smith. 
A. F. Sewell. 

E. L. Thompson. 
Tudor Tiedemann. 
John Scott Wilson. 

D. B. Wilson. 
A. J. Wetzlar, 
Rolla V. Watt. 
I. S. Watson. 
Louis Weinmann. 
W. C. Woolev. 


Mr. Bradford of Atlanta. Ga., 
Mr. Thompson of Denver. Colo. 

B. S. Worsely of Astoria. Ore. 
A. S. Gross. Ellensburg. Wash. 

The business of the regular monthly meeting being disposed of, 
the President spoke as follows: 

Mr. Ives. — I take pleasure in introducing to you, gentlemen, visit- 
ing friends from a distance, Mr. Bradford, of the Fire Insurance 
Association, headquarters at Atlanta, Georgia, I believe: and we 
have with us Mr. B. S. Worsley, of Astoria, Secretary of the Pacific 
Coast Association of Fire Chiefs. We take great pleasure in welcom- 
ing them here. If there are any other visitors present who have been 
overlooked. I would be glad to have their names. 

Mr. Hillman — I take pleasure in introducing Mr. W. J. Clemens 
Portland. Oregon. 


President Ives — We will now listen to the report from the Secre- 
tary and Treasurer of the Association. 

A Member — I take pleasure in introducing- Mr. R. R. Roper, a 

Mr. R. W. Osborn, Secretary, read his report as follows: 


Mr. President and Members of the Fire Underwriters Association of the Pacific : 

Gentlemen : — In pursuance of the requirements of the constitution I beg- 
leave to render the following report, ending February 19, 1894. 

At the commencement of my term of office, there were one hundred and 
eighty-two members. At that meeting and during the year there have 
been admitted twenty-four new members, making a total membership of 
two hundred and six. 

This membership has been decreased by three deaths, seven resigna- 
tions, and eleven that were dropped from the roll for nonpayment of dues 
and in pursuance of a recent resolution. 

This leaves a net and active membership of one hundred and eighty-live. 

The honorary membership has been increased three, making such list 
seventeen, or a total membership, active and honorary, two hundred and 
two, omitting of course the five members elected at the meeting this morn- 

Death has taken from us during the past year, Isaac Manheim, Chas. W. 
Dohrmann and Herbert L. Low. 

We have held nine meetings during the year and three special meetings. 
The average attendance has been twelve. 

At one of our meetings, a resolution was passed, vacating the rooms and 
accepting the proposition of the P. I. U. to occupy the assembly rooms of the 
Union. Action however has been deferred owing to a request from Mr. 
Haven, pending further consideration of the subject. 

Respectfully submitted, 

R. W. OSBORN, Secretary, 

Which, on motion, being duly seconded, was accepted and placed 
on file. 


The Treasurer's report was also read, received and placed on file. 


Mr. Preside nt and Members of the Fire Underwriters Association of the Pacific: 
Gentlemen :— I beg leave to present my report as treasurer, for the fiscal 
year ending' February 19, 1894. 


Cash on hand 8 40 91 

Received from dues 902 50 

Received from admission fees 105 00 

Received from sale of badges 46 00 

Received from sale of proceedings 17 00 

$1111 41 


Banquet Com $ 6 15 

Salary, E. Niles 100 00 

Reporting proceedings 59 00 

C. C. Hines, Monitor, &c 27 70 

Printing, Stanley & Co 48 50 

Binding, Althof & Bahls 11 75 

Taxes, 1892 16 49 

Taxes, 1863 12 36 

Printing, H. S. Crocker 55 00 

Library Com 41 85 

Mem. books 1 30 

Spectator 5 50 

Special circular and addressing envelopes .... 6 00 

Printing, &c., Payot, Upham 24 91 

W. C. Brown, printing 415 00 

Framing map, Sanborn Vail & Co 2 85 

Year book 5 00 

Carpenter work 1 75 

Rubber stamp 1 75 

Electroplate "song." 10 00 

Clements digest 6 50 

C. C. Hine, Law Journal 2 50 

Engrossing resolutions 5 00 

Badges, J. Marshall 46 00 

Postage, (year) 13 40 

Expressage on proceedings, &c 5 95 

Keys 1 75 

Telegrams 1 10 

Printing, E. Hughes .....■' 24 50 

Podesta & Chiappari, floral 30 75. 


Addressing and delivering notices, &c 27 50 

Addressing, 3 special meetings 7 50 

Exchange on checks 80 

Repairing lock 75 

Printing, Stanley & Co 21 00 

$1047 86 

In bank as per tag $63 55 


R. W. OSBORN, Treasurer. 

Mr. Carpenter — I rise to explain one matter. I paid for the elec- 
troplating and printing- of my song. I want it understood that the 
song was gotten up entirely at my own expense and without drawing 
from the funds of the Association. There were some who wanted to 
have it in a reduced form for publication, and proceeded to get it out 
at their own expense. I would not like to have it get abroad that I 
charged the Association for printing my song. 

Secretary Osborn — I would explain that Mr. Carpenter had noth- 
ing at all to do with this matter. We wished to embody the music as 
well as the words in the proceedings, and negotiated with Mr. Neal of 
the Pacific Underwriter, who had the electroplate, and we got it for 
ten dollars. Mr. Carpenter had nothing to do with it, and in fact, 
when he learned of it, was opposed to it. 

President Ives — I think Mr. Folger is not here; is there any mem- 
ber of the Library Committee present ? 

Secretary Osborn — I don't think so; neither Mr. Medcraft nor 
Mr. Belden. 

Mr. Carpenter — That might be deferred. 
President Ives — Will you have the Secretary read it ? 
Mr. Carpenter — If the report is on file. 
Secretary Osborn — Yes, it is on file. 

President Ives — The secretary will read the report of the Library 
Committee. (Reads): 



Portland, February 17, 1894. 

To tin President (t)id Members of the Fire Underwriters'' Association of the 
Pacific, San Francisco, California: 

Gentlemen: The Library Committee have pleasure in reporting- that 
our Association library is in a more flourishing condition than at any time 
for several years. All that is needed to place it on a level with the best 
insurance library at present known to us, is an adequate annual appropria- 
tion. The catalogues of similar libraries abroad show that we have made 
more progress than most of them ; and the only library in this country which 
lias reached the highest standard, is in Boston, where an endowment fund 
of $5,000 has been provided and a corporation organized for the maintenance 
of an insurance library. 

During the past year correspondence has been continued and some three 
hundred letters sent out by the Chairman. At the last annual meeting the 
Association voted $100 out of the surplus funds for the use of our committee, 
but the most of this was required to cover expenditures during the preced- 
ing year, and your committee have not felt at liberty to make extensive 
purchases. A financial statement accompanies this report, from which will 
be seen that the committee have expended $11.75 for binding, 848.25 for vari- 
ous works and reports, and Si 6. 40 for the incidental expenses of the commit- 
tee, making 876- 40 in all as compared with $69.55 during the preceding year. 
We request that the incoming treasurer be authorized to reimburse the 
Chairman to the extent of $45.15, excess of payments over receipts, as shown 
by the statement referred to. 

It was the intention of our committee to make material improvements 
and additions during the past year, but scarcity of funds prevented. We 
have therefore contented ourselves, aside from the purchase of a few books 
of special importance, with accumulating pamphlets and papers of interest 
at little or no expense. There are now several hundred of these in the 
hands of your committee and they will be placed on the shelves in pamphlet 
boxes in conformity with the plan adopted by the Insurance Library Associ- 
ation of Boston, during the coming year. It is also our wish to see a num- 
ber of insurance reference works added, a list of which will be furnished to 
our successors. Our experience leads us to believe that, say, $25 per annum 
should cover the incidental expenses of an active library committee, and 
that a further 835 would pay for regular insurance publications other than 
periodicals, which should be added to the library annually. The leading: 
insurance journals have been supplied to us without expense for two years- 
and the publishers appear willing to continue this course until our condition 
is more prosperous. It is a mistake, however, to suppose that our work 
should end here. There are technical, legal and other works published both 
in this country and abroad which are not in our possession and would be 
valuable. Whenever further appropriations are made, an active library 
committee can use them readily. 


Since the last meeting a special effort has been made to procure statistics 
of fire losses in the larger cities of the United States, and from the collec- 
tion of reports received it is expected a paper will be prepared for our annual 
meeting in 1895. 

Besides continuing correspondence with various associations in the East- 
ern States and Great Britain, we have established friendly relations with 
several new ones, including the Insurance Institute of Manchester, Auck- 
land Fire Insurance Association, New Zealand Fire Underwriters' Associa- 
tion, Insurance Institute of New South Wales, Fire Underwriters' Associa- 
tion of Victoria and the Insurance Institute of Victoria. The Chairman of 
this committee has been elected an honorary corresponding member of the 
last named society. 

Our twentieth annual meeting will be held in February, 1896. We rec- 
ommend that the new Library Committee be instructed to arrange for the 
preparation of a Blue Book of this Association, which shall contain a com- 
plete catalogue of the library, a list of all the members from the beginning 
of the Association, with appropriate references to those deceased, and an 
index to our Association reports up to and including the twentieth. Such a 
book could include other interesting matter and would appropriately cel- 
ebrate our success. Some time would be required for the preparation of a 
complete list of members, giving dates of election, resignation, etc. 

We recommend that the thanks of the Association be extended to the 
publishers of the Coast Review, Pacific Underwriter, Monitor, Weekly 
Underwriter and Standard for continuing to forward their valuable papers 
without charge. Also to Mr. E. H. Porter of the Inspection Bureau for 
kindly looking after the filing and binding of periodicals during the year. 
Also to the various associations from which material for the library has been 
received, and that this committee be authorized as heretofore to forward 
copies of our proceedings to them without charge. 

Respectfully submitted, 


• The Fire Underwriters' Association of the Pacific 

In Account with the Library Committee. 

To incidental expenses, 1892-93 $36 35 

To purchases of books, etc., 1892-93 33 20 

By cash from R. W. Osborn ($27.70 and $41.85) .... $6955 

To postage, etc.. 1893-94 10 80 

To expressage, 1893-91 5 6o 

Duty on foreign publications 1 00 

Spectator Co., old balance 5 5° 

C. C. Hine, back numbers 2 50 

Electrical Periodicals 1 00 

Association reports, etc 8 50 

Statistical works 15 00 

Legal works 6 50 

Insurance works of reference 8 25 


Binding periodicals n 75 

By payments through R. W. Osborn 31 25 

By balance due chairman 45 15 

$145 95 $145 95 
Portland. February 17. 1S94. 


Mr. Grant — I think it would be in order to appoint a committee 
of three to report on the Library Committee's report and the sug- 
gestions contained in them. I move that a committee be appointed. 

Mr. Driffield — I second the motion. 

Mr. Carpenter — Mr. President, it seems to me that the succeeding 
Library Committee would be the proper one: the one elected to suc- 
ceed this committee. They will simply carry on the work and 
act on the suggestions of the present committee. That would 
fill the bill. 

Mr. Driffield — Mr. Capenter. there is a recommendation regard- 
ing a payment of the balance, and recommendation of the payment 
of certain amounts of moneys for different propositions during the 
year. Hitherto it has always been the practice to refer the report of 
the Library Committee to another committee to be reported on. and 
the report is read prior to the election of the Library Committee. 

Mr. Carpenter — I didn't understand that this committee was to 
report at this session. 

Mr. Driffield— Oh. yes. 

Mr. Grant — My idea in making the motion was that the recom- 
mendation could become part of the voice of the meeting, and would 
be in the nature of advice to the succeeding committee. 

President Ives — Are you ready for the question? It is moved and 
seconded that a committee of three be appointed. All those in favor 
say aye. The motion is carried. How will you have the committee 

A Member— By the Chair. 

President Ives — If there is no objection, the Chair will appoint 
on this committee Mr. Grant. Mr. Driffield 


Mr. Driffield— I decline. 

The Chair — Mr. Carpenter and Mr. Outcalt. The committe will 
be able to report, probably, before the close of the meeting to-mor- 

Mr. Driffield — To-morrow afternoon's session. 

Mr. Outcalt — Mr. President, will you kindly excuse me from the 
committee? I am busily engaged. 

Mr. Carpenter — It won't take ten minutes. 

Mr. Outcalt — Oh, well, I will give you half an hour. 

President Ives — If you can devote the time we should be pleased 
to have you. 

Mr. Outcalt— All right. 

Mr. De Veuve — I would like to introduce Special Agent Green of 
the Continental Insurance Company and Mr. Lachelle. 

Mr. Driffield — The report of the Executive Committee is ready. 

President Ives — We will listen to the report. 
Mr. Driffield reads. 


Mr. President and Gentlemen : Your committee have examined the 
books and vouchers of your Secretary and Treasurer for the fiscal year just 
ending, and the same have been duly audited and found correct. The Sec- 
retary's report presented at our last annual meeting showed a cash balance 
on hand and. in bank amounting to the sum of $40.91 ; the receipts during the 
current year have amounted to $1,070.50. and the expenditures to $1,047.86, 
leaving on hand at this date $63.55. 

Of the above amount of expenditures the sum of $222.30 was on account of 
indebtedness incurred prior to the current year, and it is with pleasure we 
can state that at the present time there is but a single bill outstanding, 
amounting to $14.75, and incurred during the previous year, and remaining 
unpaid for the reason that your Secretary is unable to pass upon the correct- 
ness thereof. It will be seen that, while the balance at present on hand is 
but slightly in excess of that brought forward from last year, we have gone 
ahead financially to the extent of a trifle more than the amount expended 
during the year on account of indebtedness incurred during the previous 
one. In view of the fact that the Association has incurred no expense what- 
ever in the matter of rent during the current year, the result shown is 
scarcely a matter for congratulation, and the chief reason for this state of 


affairs is apparent when you learn the fact that, while we spent the sum of 
$415 in editing the report of last year's proceedings, we received but the 
paltry sum of $17 on account of sales of such reports. 

Our active membership a year ago numbered 182, and now stands at 185, 
a much less increase than that anticipated, as, although we received an 
-sion to our ranks of 24 new members during the year, we lost, by death, 
3 members, by resignations 7, and by being dropped from the rolls for non- 
payment of dues the large number of 11, a loss of 21, as against a gain of 24. 
The dues for the current year have been collected in all save two instances, 
in which disputes exist as to payment, and which will undoubtedly be sat- 
isfactorily arranged ere long. The committee would, however, urge upon 
the members the necessity of a more prompt response to the calls of the 
Association for the payment of dues, as the Secretary has been harassed by 
creditors who have been obliged to wait for their money beyond all reason- 
able limits on account of dilatoriness of members in the payment of their 

The honorary membership of the Association was increased during the 
year by the election of three new members — Messrs. F. A. Porter, J. F. 
Houghton and H. H. Bigelow. 

Nothing definite has as yet been determined in regard to our continued 
occupation of the present quarters, and we are still merely tenants upon the 
sufferance of the Pacific Insurance Union. It may be as well to let sleeping 
dogs lie, and to make no effort looking to an exact understanding upon the 
subject, but it is to be trusted that, in any event, we may see our way clear 
to the retention of the rooms. 

In the event of our being called upon in the future to pay rent it will be 
necessary to so increase our receipts or lessen our expenditures as to enable 
us to meet such increased obligation, and in view of the most unsatisfactory 
results from the sales of the reports of our last annual proceedings, we sug- 
gest that you consider the advisability of making a charge of, say, 50 cents 
per copy for each and every copy furnished to the members. 

This small fee would entail no hardship and would enable us to material- 
ly reduce the annual tax upon the funds of the Association by reason of the 
expense of publication of its annual proceedings. 

The library fund of the Association has benefitted considerably by the 
expenditures during the year, and it is to be trusted that the intelligent 
work of the Library Committee may receive what pecuniary assistance it 
requires during the ensuing year. 

The duties attending the office of Secretary and Treasurer have been per- 
formed with efficiency and zeal during the current year, and it is to be 
hoped that the Association may be able to retain the services of our present 
officer during the ensuing term. 

Respectfully submitted, 



President Ives — If there is no objection, the report will be re- 
ceived and placed on file. 

Mr. Driffield — There are recommendations there that a committee 
should be appointed. We have made certain recommendations in the 
report which might receive attention from a committee, if you would 
make such a motion. 

Mr. Gunnison — I move it be referred to some committee. 

President Ives — It would simply save the work of two committees 
and it would require about the same attention if the Library Com- 
mittee will accept the same appointment, and also act and report 
upon the suggestions of the Executive Committee. I will ask them to 
do so. Silence gives consent, and we will assume that they take their 
new duties. 

Mr. Carpenter — I would like to sae the honors a little distributed. 

Mr. Gunnison — While the question is warm, I would suggest the 
payment of about a dollar for each copy of the proceedings. I think 
it would be well to charge each one a dollar to cover the expense of 
the publication. I understand it is only half of the expense. 

President Ives — Would that come properly within the purview 
of the committee? 

Mr. Gunnison — I just made the suggestion. 

President Ives — There seems to be no desire to take any particu- 
lar action, and we will leave it to the committee. There is one thing 
I would like to say, however, while it is fresh in my mind: It is 
the collection of dues. There has been a great deal of trouble in the 
last year in the collection of dues, and I have no doubt that our 
friend Osborn has encountered difficulty in collecting these dues, and 
been to a considerable expense, and as you well know, the Association 
cannot afford to expend anything more than necessary. There are some 
amendments proposed with reference to that particular thing. The 
dues should be paid within thirty days, and if they run over thirty 
days, say to sixty, they should become delinquent and the names of 
such members should be dropped from the roll. 


Mr. Carpenter — I think perhaps it would be agreeable to the 
members one and all, as well as to the Secretary and Treasurer, if we 
come prepared to-morrow afternoon with our five dollars and plank 
it down. I know I would be glad, and there are many others: I 
think all would. You can have the receipts ready and hand them to 
us when we come in. 

Mr. Kinne — In regard to the remarks made, as arguments, in 
regard to influencing the committee to report in favor of paying for 
the proceedings, one dollar or a larger sum. I think it all wrong. 
Many of you may think it is all right, but I think it ought not to be 
done at all. The only means of communication you have with your 
absent members — we have 185 and there are only 85 here — and the 
only thing they get out of their five dollars, is the reading of the 
reports, and if you are going to tax them fifty cents or a dollar more 
you will probably have less members next year than you have to- 

Mr. Carpenter — The recommendation is that it be referred to a 
committee. My idea is the same as Col. Kinne 's — that the dues carry 
the right to receive one copy of the report of the proceedings. At the 
same time I say it can be arranged when the committee reports. 

President Ives — If there is nothing further to be said in reference 
to this question of reports, the President will take the liberty of 
addressing the Association, following out the time-honored custom of 
others who have gone before him. (Reading) : 


Gentlemen of the Fire Underwriters Association of the Pacific, it affords 
me great pleasure to welcome so many members and friends of this Asso- 
ciation to our eighteenth annual meeting. 

Occasions like this serve as mile-stones along the insurance highway by 
which we can measure our progress, and where we may rest a little to 
exchange ideas of past events and renew our friendly relations for the fu- 
ture. As our physical system gains strength by exercises, so too do our 
mental powers increase with use, and I think each member of this associ- 
ation gets a wider knowledge of the insurance business and obtains a 
stronger hold upon its principles by attending these meetings. For profit, 
or for improvement, only the present is ours. Time does not linger in its 
flight, nor does the current of events turn backward. 


During the last few months, death has stricken from our rolls the well 
known name of Isaac Manheim, Herbert L. Low, and Chas. W. Dohrmann. 
The records of their lives are closed, and their voices are silent, but memory 
still gives them a place among us. A few of our former members have 
resigned during the past year, but others have been elected to fill their 
places, so that the association now maintains about the same numerical 
strength as heretofore. There are, however, a number of special agents, 
general agents and managers of companies who are still out of our ranks. 
Can we not enroll them as members, thus benefitting them and strength- 
ening the association ? 


Assuming that there is strength in union it naturally follows that enlarg- 
ing the union augments its strength, and "from the signs of the times' ' 
such harmonious relations as exist among members of the Fire Under- 
writers' Association of the Pacific may prove particularly valuable in the 
near future. 

At our last annual meeting, amendments were adopted to article 9 of our 
constitution and to sections 4 and 6 of its by-laws with reference to meet- 
ings, to election of members, and to the writing and publishing of papers for 
annual or for regular meetings. Since then members of the association have 
objected to some of those amendments, claiming they were not calculated 
to advance our interests, and that they were not adopted in accordance with 
the constitution and by-laws. As this division of opinion concerning such 
important questions has delayed and impaired the work of the association 
during the past year, it is to be hoped some solution of the difficulty may be 
agreed upon before this meeting is finally adjourned. 

The first quarterly meeting of the Association last year was held in May, 
according to the constitution as amended at the last annual meeting in 1893. 
Owing to discussions that then arose with reference to those amendments, 
and to the apparent difficulty of electing new members in accordance there 
with, that meeting was adjourned to the third Tuesday in June, and has been 
so adjourned from month to month until the present time. Since May, 1893, 
new members have been elected by a two-thirds vote of the members pres- 
ent each month at the adjourned quarterly meeting, and when possible to do 
so, have also been elected by vote of the election committee provided for by 
last year's amendments to the by-laws. These difficulties should be obviated 
so that the Association may be enabled to work harmoniously for the general 
advancement of our profession. If little has been accomplished during the 
past year, more should be done during the coming one, and certainly there is 
no lack of errors and abuses in our business which might profitably engage 
our attention. 


Each year demoralization of the insurance business becomes more marked, 
fire losses increase, and surplus funds shrink in the most alarming manner. 


This unfortunate state of the business is largely due to excessive competi- 
t ton which has gradually resulted in removing too many of the safeguards 
that formerly protected our contracts. The Pacific Coast is one of the few 
divisions of the United States that pays a profit to underwriters. It is there- 
fore of the utmost importance not only to the companies but to their man- 
agers here, that each member of this association should at all times seek to 
maintain adequate rates, to reduce unnecessary expenses, and to encourage 
correct practices in all the details of our business. 

The Fire Underwriters' Association of the Pacific has, since its inception, 
been recognized as an important factor in the insurance business of this 
Coast, and it is for you, gentlemen, to continue its admirable record of the 
past. With this end in view, your attention should be given at an early 
day to questions concerning fire losses, co-insurance, mortgage clauses and 
possibly schedule rating. 


A large proportion of the fires result in losses that are less than 20 per 
cent, of the amount insured. Such claims are too often settled (not adjusted) 
in a careless and liberal manner that, in the aggregate, unjustly deprives 
the companies of a vast amount of money each year. The more important 
individual losses are also frequently slighted in details of adjustment. 
There was a time, perhaps, in the early history of this Coast, when general 
estimates, profanity, and firearms were recognized as legitimate means for 
determining fire losses. At that time rates were high, profits from under- 
writing were large, and the companies could better afford to follow the 
careless customs of the country than they can now. Those golden days (or 
days of gold) have long since passed, and the adjustment of fire losses should 
now receive as careful attention on this western slope of the Sierras as it 
does in districts further east. 


Co-insurance is another important matter that has heretofore received 
insufficient attention outside of our marine contracts. From it advantages 
might be hoped for in fire policies, which a mere increase of rate does not 
seem to offer. It is a well known fact that increased cost for even 
the necessities of life results in less demand for them, and that lower 
prices for such articles lead to their more liberal use. Insurance has become 
a commercial necessity, but the demand for it is nevertheless governed to a 
considerable extent by the rate. If rates increase, the amount covered on 
the choicest risks of their class will doubtless be reduced, because it is, gen- 
erally speaking, the owners of the most desirable business who can afford to 
carry a large proportion of their own insurance, and who are the most easily 
induced to do sd. 

Liability to total loss under many of our policies would then be greater 
than before, and not only our ratio of loss to insurance, but our ratio of loss 
to premiums would probably soon show an increase in the better class of 
business. The more hazardous risks, and property belonging to people who 


anticipate a fire, would doubtless pay a little more premium at a higher rate, 
as full insurance is always demanded on that class of business, but the 
advantage, if any, to companies from advanced rates would in all probability 
be less than many underwriters anticipate. 

If the above reasoning is correct, it certainly seems that co-insurance 
might be used with much better results than could be expected from an 
advance in rates. The co-insurance clause could be graded in a manner 
that would leave the assured full option as to the value he might wish 
to protect by insurance, and a sliding scale of rates might apply about as fol- 
lows, viz : 

With 50 per cent, co-insurance clause, add ten per cent, to the estab- 
lished rate. With 60 per cent, co-insurance, charge simply the established 
rate. With 70 per cent, co-insurance clause, deduct ten per cent, from the 
regular rate. With 80 per cent, co-insurance clause, deduct twenty per cent, 
from the regular rate. 

To such graded co-insurance clause there might be added on some 
classes of hazards, if not on all, a graded loss clause, ranging from sixty 
to eighty per cent., according to the requirements of the case. Thus we 
return to the first proposition, that co-insurance is an important matter 
— a subject worthy of your consideration. 


With reference to the printed mortgage clauses so commonly used, we 
all know that many of them are merely amendments to our contracts with 
the assured, increasing the hazard without additional premium, and 
waiving most of our rights under the conditions of our policies. Some form 
of mortgage clause should be required embodying at least the right to 
cancel by giving ten days' notice to the original mortgagee, and in case of 
loss, to subrogation of the mortgagee's rights, and the contribution of all 
other insurance on the property whether valid or invalid. The present 
forms of mortgage clause are a great and growing menace to underwriters, 
and reform should be demanded. 


The question of schedule rating should also have our attention. If this 
method of rating could be universally applied, we should soon notice a 
marked improvement in the construction of buildings, and a corresponding- 
reduction in the percentage of loss to value under our policies ; but so long- 
as structural defects are overlooked by companies in establishing rates on 
buildings, the owners of such property cannot be expected to invest much 
money for its improvement. This question is being generally considered by 
underwriters throughout the Eastern States, and we should be ready to 
intelligently receive such innovations as may arise from schedule rating. 
whenever it is adopted on this Coast. 

As a fitting conclusion to my brief remarks I wish to thank you, gentle- 
men, for the continued interest you have shown in the proceedings of our 


Association during the past year, and for personal favors and assistance 
rendered me while I have had the honor of being your presiding officer. 

( Applause. ) 

Mr. Dornin — Mr. President, I suppose we shall adjourn presently 
and meet again this afternoon. I would like to say that there are a 
number of suggestions in the President's paper which I think of vast 
importance. 1 would like to see the incoming President take up the 
topics and appoint committees to make out reports. There are sev- 
eral things in my own experience, as referred to by the President, of 
vast importance, particularly the three-quarter value clause on stocks 
liable to depreciation, country store risks, etc., risks in unprotected 
cities: and it seems to me a question now of more importance than 
ever before, and I would like to see these things referred to special 
committees to report upon, so that we may move along as fast as pos- 

Mr. Carpenter — I second the motion. 

Mr. Kinne — It seems to me that the appointment of a committee 
will succeed in burying the thing in the sea deeper than McGinty 
ever was. You know the slim attendance that we have at our 
monthly and quarterly meetings, and the valuable suggestions of the 
President, it seems to me, should be considered here and not referred 
to a committee, and that committee supposed to report in one or two 
months and never report at all. It seems to me we ought to discuss 
it at the meeting here to-day or to-morrow, or whatever time may 
be set aside for it. 

Mr. Carpenter — I move as substitute for Mr. Dornin's motion that 
a committee be appointed to report at this meeting to-morrow, and 
as the President may have some diffidence in appointing a committee 
to consider his own report, I make the suggestion that Mr. Dornin. 
Col. Kinne and Mr. Sexton be that committee. 

Mr. Kinne — No. There seems to be no necessity. Mr. Chairman, to 
have a special committee to report on your address, as it is before the 
whole organization — before the members present. We can talk and 
think about it and then the matter can be brought up at the proper 


time and be considered and discussed, if you might term it in that 
way. as to the propriety of those suggestions. A committee can then 
be appointed of three of the past officers of this Association and 
report some time to-morrow. 

Mr. Gunnison — As usual, I like to agree with Brother Kinne, and 
do in this instance. I don't think there is any need of appointing a 
special committee. It can be discussed among the members. I don't 
see that the committee could recommend anything but what you 
have recommended. 

Mr. Carpenter — I don't like to speak often, but my idea is that 
the committee might get their ideas crystalized into, perhaps, cer- 
tain different forms and then submit them to the meeting, and they 
could be taken up and discussed — have some particular form so we 
could talk about it. 

Mr. Kinne — My idea is this: I did not think the committee could 
report so early — could not have a chance to discuss the matter fully. 
It seems hardly fair to expect them to make a report within twenty- 
four hours. We can discuss the matter fully here, and then if there 
is anything that seems necessary to refer it to a committee it can be 
done. I move as an amendment that the appointment of a commit- 
tee be laid over until after the new business and we have had a 
chance to discuss the thing, and then appoint such committees as are 

Mr. Gunnison — I second the motion. 

President Ives — Is Mr. Carpenter's motion seconded? 

Mr. Carpenter — I think not. 

Col. Kinne — My motion is that the appointment of a committee, as 
outlined by Mr. Dornin, be laid over until after the discussion of new 
business, and then a committee appointed — not now. 

Mr. Driffield — Mr. Carpenter's motion was seconded, Mr. Presi- 

Mr. Kinne — If the motion was made and named me on the commit- 
tee I certainly would not desire to serve as one of them. I think he 


named t lie committee. I don't think it is the proper thing, and I 
am not inclined to serve. 

Mr. Carpenter — I rise to a question of privilege. There is no rea- 
son why the committee is not proper. 1 would like to know where I 
am at fault. The President has some delicacy in appointing a com- 
mittee to consider his own report. 

Mr. Kinne — There is no parliamentary law for it, but it is all 


President Ives — The Chair is in doubt of just what motion is 
before the house. 

Mr. Grant — I understood Mr. Carpenter to say that he made a 
motion as a substitute, not as an amendment. 

President Ives — The Chair is in doubt whether it was Mr. Dorn- 
in's motion or Mr. Carpenter's motion. If Mr. Kinne withdraws his 
amendment to the amendment, we will consider Mr. Carpenter's 
amendment. I don't know whether Mr. Dornin accepted it or not. 

Mr. Kinne — I did not withdraw my amendment, or substitute, or 
whatever you call it. If my name appears in the motion, as stated 
by Mr. Carpenter, and I have to be one of the committee, I have not 
the time to attend to it. I don't want to be put on it. I am per- 
fectly willing to perform any duty that is required, but what I want 
to get at, is to have the younger members called upon to do the work. 

President Ives — If I understand the question, it is that a commit- 
tee of three be appointed. 

Mr. Kinne — A committee consisting of three to consider the sug- 
gestions contained in the President's address, with a view to report- 
ing some definite form for action and place the same before us to- 
morrow afternoon — is that correct? 

Mr. Carpenter — I am satisfied to omit the names. 

President Ives — Those in favor of the suggestion, or the motion, 
please signify it by saying aye 

Mr. Dornin — That is the substitute for my motion? 
A Member — Yes. 


The motion was carried. 

Mr. Gunnison — I would suggest in regard to speeches being scat- 
tering, and so forth, that the members come loaded with argument- 
ary cartridges that will not scatter. 

President Ives — As I understand it, there is no committee ap- 
pointed to consider this question. How will you have the committee 

Mr. Dornin — I move that we adjourn and appoint the committee 
this afternoon. 




2 P. M. 

The President announced his appointment of the following com- 
mittee to consider the recommendations in the President's address: 
W. H. Lowden, B. D. Smalley and William Sexton. 

Mr. Franklin Bangs was invited by the President to read a paper 
on "Classification " and was requested to "occupy a small pulpit " 
which had been provided as a reading desk. 

Mr. Bangs in taking his position as requested, said: 

Mr. President and Gentlemen: — This is the first time I have had 
the honor of occupying a " pulpit. " I hope I shall be able to fill the 
situation with honor to myself and advantage to my hearers. 

From my observation I know it to be customary to preface an 
effort of this kind with an apology. I can make an apology in all 
sincerity and truthfulness by saying, that not much can be expected 
from me on this occasion. This from the fact that my paper was 
written, at the request of our President, very hurriedly, and to take 
the place of one which had been promised by a gentleman who has 


been detained out of town. I regret as much as you do that he could 
not be here. 

Mr. Bangs reads: 



In almost all classes of business the seller takes the cost price of his 
goods as a fixed basis on which to figure his transactions, but the very 
nature of our business precludes us from obtaining any permanent or 
reliable data on which to base our rates. At best, our efforts in this direc- 
tion are unreliable and inferential, and for this reason it is our duty to the 
companies which we represent, and justice to the public from whom we 
exact these rates, that every effort in our power be made to so adjust 
them that each risk shall pay as nearly as possible the rates which its 
hazard justified, but how to reach this result is a subject that is worthy of 
far more consideration at the hands of the insurance fraternity on this Coast 
than it has received. 

It seems to me that a careful, systematic and scientific classification of 
the risks on this Coast is a subject for the Pacific Insurance Union second 
only in importance to the maintenance of them. Last year there was a 
committee appointed from this association for the purpose of securing some 
action from the Pacific Insurance Union towards such a classification within 
its jurisdiction, but how much it has been able to accomplish I have not yet 
learned, but sincerely hope the committee will be prepared to make a 
favorable report at this meeting. 


Two systems of rating are now in force by the Union. First, what is 
called tariff rating? This system with us was conceived in guesswork, 
nurtured in ignorance, and has developed into an absurdity. There are 
none who respect it; few who accord it the consideration due to age. or who 
apologize for its existence. It is obviously inaccurate in its basis, absurd 
in its deficiency charges, cumbersome in its application and unreliable in 
its results. Its rates are totally insufficient as applied to some sections, and 
little short of robbery of the assured as applied to others. It has not the 
confidence of the companies, and the respect shown it by the agent is in 
inverse proportion to his understanding of it. While it was based on 
guess-work thirty years ago, yet I am satisfied no Yankee did the 
guessing. Little effort has since been made to improve it or adapt it to 
the changed conditions which time has developed. 


The other system of rating, schedule rating, is worthy of as much praise 
as the former is of condemnation. Under the Pacific Insurance Union it is 


being carefully and intelligently developed into what rating should be— a 
science. While it has still much to accomplish, it has given, so far, more 
satisfactory results than have ever been attained on the Coast, and it is 
unfortunate that more attention has not been given to familiarizing the 
field men and the community with the details of the system, for so long- 
as the assured can be made to feel that his ratings are based on the intelli- 
gent application of experiences, even though he has not the faintest 
understanding of it, he will be far better satisfied than if he feels, as he 
too often does, that his rating is the arbitrary action of a monopoly. 

The one great defect in this system is the want of reliable data, based 
upon actual experience of the companies themselves, upon which to base 
the "key rate" and "exposure charges," and for this reason a united classi- 
fication of the business of all the companies on the Coast is indispensable. 
For how much of our confidence can these schedule rates have when we 
know that the basis on which they are formed is purely arbitrary? Care- 
fully as they are adjusted and intelligently as developed, they can never 
have our confidence so long as the basis on which they are established is 
only a hypothesis, and I cannot help feeling that much time and labor is 
being wasted on a valuable theory for the want of some practical informa- 
tion, for we know an ounce of experience is worth a pound of theory. 


The annual premiums from this Coast are now about $12,000,000, and 
the classification of even one year on so large a sum could not but be very 
valuable, and while it would not be sufficient information on which to base 
a tariff, it might furnish information that would upset many of our cherished 
theories, and if continued for five years it would furnish the best basis for 
a tariff the insurance companies have ever had, and would assure the per- 
manency of the Pacific Insurance Union by making it indispensable. By 
being able to annually readjust its rates in any town, or on any class of 
risks, on such a large experience as this, it would make it undesirable, if 
not impossible, for any company to exist outside of the Union. 

We know that the proposition for the Union to assume this work will be 
objected to for several reasons. Many companies on this Coast have a 
classification of their business extending over many years and compiled with 
great care, and to which they pretend to attach great importance, and yet 
we feel safe in saying that not one of these companies has sufficient con- 
fidence in its results to be governed in any respect by them, unless, 
perhaps, it is to decline altogether certain " special hazards. " So long as 
the Pacific Insurance Union fixes rates, it is impossible for these com- 
panies to utilize their classification, and in event of suspension of rates, 
our recent experience has shown us that they would in nowise be governed 
by them. 


Others object on the ground that it would be giving men, compara- 
tively new to the business, the benefit of their wide experience; but 


these gentlemen should remember that in event of dissolution of the Union 
their danger is not from each other, but from the wild and reckless writing- 
of these same men, who have no experience to guide them, and who sacrifice 
rates in total ignorance of the limit to which they could afford to go. While 
they might eventually be driven from the field, yet the business would be 
left in a deplorable condition, and it would be infinitely better to give 
them the benefit of an experience which might restrain them. Experience 
would still give the educated underwriter an advantage, which would 
make the difference of profit or loss in competing on the same basis. 


That the classification kept by the different companies on this Coast is- 
of little value in establishing their rates is shown by the wide discrepancies 
and results of the classifications kept by companies conducting their busi- 
ness on comparatively close lines. I have before me the classification for 
ten years of two companies doing a very large business in this Compact 
district, and the results are interesting. 

Taking dwellings, for instance, which, owing to their great number and 
their freedom from conflagration hazard, should show a very close ratio in 
both companies ; but we find that the loss ratio of one company is 40 per 
cent less than that of the other on this class, and we find the long term 
risks of one showing a greater profit than its annual business on the same 
class. With these discrepancies, we need not be surprised at finding the 
difference vastly greater in other classes. If the aggregate results of the 
companies' classifications are so unsatisfactory, how much more so would be 
its experience as applied to sections? 


The experience of a company of twenty years is of no more value than 
its experience for five years. The changed mode of constructing buildings,, 
the increased fire protection, the use of new chemicals in manufacturing,, 
the uncertainty quantity, electricity, the sprinkler system, all have such 
effect on the rate that the application of the earlier experiences would grv e 
a false inference to the later results. Experiences of twenty companies for 
one year must be evidently more valuable to any one company than its own 
experience for twenty years. 

Averages are only valuable when they are large totals. When taken 
in small amounts they are worse than useless. 

Taking this view of the matter, it seems to us that the subject of classi- 
fication of business is one pre-eminently for the Pacific Insurance Union. 
With it we can establish a system of rates throughout the Coast that we 
can look upon as just to the public and remunerative to ourselves, that will 
maintain the same average rate, but put its true proportion of the burden 
not only upon each class of hazards, but upon each section of the Coast. 
In such an adjustment we may find the true solution of a problem that has 
so often threatened the life of the Union. 



Another objection that would be raised would be the cost, for a classifi- 
cation such as we should have should be under the supervision of a skilled 
actuary, assisted by a force of competent clerks. Probably one of the chief 
defects in the classifications kept by individual offices is that the work is 
done by a junior clerk, and very much as my teacher used to accuse us of 
committing our lessons — by main strength and stupidity. 

The work to be properly done would often mean several classifications 
of the same risk. The classification of the basis, of the exposure and of the 
total. While the expense would be considerable, I feel the results would 
fully justify it, and since the adoption by this Association of the sixty-day 
rule in the payment of losses has saved in interest a sum that will go a 
long way towards paying the expenses of the Union, they might now feel 
like assuming this expense. But whether they will or not, I feel it is a 
duty they owe to us, if not to themselves, to give the specials in the 
field such a schedule as will enable them to tell the agent and the assured 
definitely what a rate will be under certain contingencies, and it is the 
duty of the special to so place this rate before the assured that he will 
respect our rating as a science, not as an arbitrary charge. 



The President — I think Mr. Bangs is particularly entitled to credit 
on the ground that he prepared his paper at the last minute. He 
has proved himself capable of good work under high pressure. 

Mr. H. M. Grant — I feel impelled to remark that it is a usual thing 
for people who read papers to preface the reading with an apology. 
I don't believe an apology was necessary on the part of Mr. Bangs, 
for his paper was certainly a very able one. It rehearses the same 
subject that has been considered year after year by this Association, 
and very elaborately two years ago by Mr. Folger, who then pre- 
pared tables and ways for classification of the risks of the Pacific 
Insurance Union. 

This seems to be the proper place for arriving at general exper- 
ience. The matter was placed before a committee two years ago, but 
they were not able to report at the last annual meeting. Mr. Watt, 
I believe, was chairman of that committee, and if he were here I 
think he could say something interesting on the subject. He might 
be able to tell us where the report is and what has become of it. It 
is to be hoped that Mr. Watt will succeed to the presidency, as usual, 


and probably being' president as well as chairman of that committee, 
he will be able to effect something in this line. There does not seem 
to be any advantage in the discussion of these matters unless we can 
get them into practical shape. If there is anything that we can do 
to further the proceedings of that committee by way of bringing the 
matter into practical shape, perhaps it will be well to call for sug- 
gestions to that end. 

The President — I think the matter was put into about as good 
shape as it could be when it was passed over to the Pacific Insurance 
Union. I do not think there has been any action by that body, if 
my memory serves me correctly. 

Mr. Grant — I suppose the Union has a good many important things 
to think of; but the carrying into effect of a better system of classi- 
fication would certainly be extremely beneficial. The experience of 
any one company does not go very far and does not do very much 
good. And whatever good each company derives from its own ex- 
perience, it is not likely to give it to others. It seems to me that if 
there is anything that can be done to get that question of classifica- 
tion into shape, it should be done at this session. I have no doubt 
that suggestions could be made at this meeting which would be of 
great benefit to us. What we discuss here is of interest. This sub- 
ject has been talked of a great deal and it has been put in good shape 
by the author of the paper last read; and if we can only get it into 
tangible form it will be of great benefit. 

Mr. Kinne — Would it not be well to make a note of the fact when 
Mr. Watt comes in. and call upon him for a report as to what has been 
done. It seems to have been our experience for a good many years 
that the important thoughts and practical experience of gentlemen 
who are in the field, find merely a common dumping-ground for those 
ideas in the Pacific Insurance Union. When a subject is referred to 
a committee, that committee should respond, either that it is worthy 
of consideration or that they do not deem it practical. I think we 
ought to have a reply from that organization. Many of us are mem- 
bers of it. And when a committee is appointed they should consider 
the question and report that it is worthy of attention, or that they 


cannot carry it into effect. This way of going- on year after year and 
gathering- together and consolidating our ideas without putting them 
into such practical shape as to bring about an effective result to all 
concerned, is getting to be somewhat tedious and is of no value. 

Mr. A. A. Andre — I agree with Col. Kinne fully. I think the 
idea suggested by Mr. Bangs that the special agent should know ex- 
actly the plan on which classification is based, so as to be able to 
explain it to the assured, is the correct idea. I believe that every 
special agent and every field agent ought to know the formula by 
which classification is arrived at. Ought to know how to use the 
formula, and how much percentage there is to be taken off in a 
given town having a schedule. He should be able to tell the insured 
exactly, if he looks at the risk and examines it carefully, what classi- 
fication it would be placed in. Ought to be able to tell him how 
much the rate will be, and not be obliged to refer it to a higher 
authority. This matter has been discussed at some length before 
and I think we ought to take some action in regard to it so as to 
qualify the special and the local agents and enable them to give an 
intelligent answer to the assured when he asks why his rate is this 
or that. But how to arrive at that result I don't know. I will have 
to leave that to greater brains than mine. 

Mr. E. W. Carpenter — Mr. Watt is not only chairman of this 
committee, but he is a member of the Executive Committee of the 
Pacific Insurance Union and has been such for a number of months. 
I presume when we call on him for a statement in regard to the 
situation, that he will be able to give us some valuable light. He 
can state what action has been taken or refused to be taken and what 
suggestions it is advisable to carry out. I can see, myself, that there 
might be possible difficulties in the way of putting into operation a 
plan whereby the Union makes the rates for a large number of men. 
I can see that there might possibly be a misinterpretation of 
the rule, which would create discord and confusion. At all events I 
think it would be well to call upon Mr. Watt as suggested, and if he 
cannot give any report at once, he can at least, to-morrow. 


The President— As I understand it, Mr. Watt was on the com- 
mittee on the classification that was invented or drawn up by Mr. 
Folger. I do not know whether his duties extended to the question 
of schedule rating or not. I don't know whether that committee 
was intrusted with any such matters. 

Mr. F. A. Swett was called upon by the President to read a paper 
on ' • Insurable Interest. ' ' Mr. Swett said : 

I was somewhat surprised to hear our friend Bangs allude to his 
unfamiliarity with the pulpit. I had supposed that there was at 
least an indirect connection between insurance men and the pulpit. 
For if the daily press is to believed, we are, as a class, constantly 
engaged in preying. According to them, the main difference between 
ourselves and ministers of the gospel is, that they are engaged in 
praying for the public, while we are engaged in preying on the pub 
lie. (Laughter.) 

Mr. Swett then read his paper as follows: 


Mr. President and Gentlemen: 

When I rashly promised to write an a,rticle to be read at this annual 
meeting of our Association, it was my purpose to present a paper upon " In- 
surable Interest," and to treat the subject very fully, but I had not pro- 
gressed very far in the arrangement of material at hand when it became 
apparent that to present it in all its lights and shades, phases and varia- 
tions, would require more time in the preparation than I could well devote 
to it, and very much more in the reading of it than you would care to grant 

What I now offer I do not consider more than suggestive of the import- 
ance of the subject, which is one that should receive the attention of one 
more capable of presenting it in a manner worthy of its magnitude, and the 
consideration of the members of an association representing the brains of a 
profession in which are to be found men of the highest intellectual attain- 
ments, keen discrimination and sound judgment. 

Such an article as I thought to present as completely as my limited 
knowledge would enable me, would necessarily be, to a large extent, a com- 
pilation of decisions in leading cases which have come before our State and 
Federal Courts, and the works containing them are doubtless to be found in 
the offices of every manager and general agent ; and you would be much 
more likely to consult such works for decisions affecting a case in hand, 


than an ?rticle by a member of this Association, no matter how exhaustively 
he may have treated the subject. 

Were I to place before you the result of all my researches in this field, 
with references and decisions confirmatory of such opinions as I might ad- 
vance, you would be greatly astonished, and I would be more so if you failed 
to beg to be excused during the reading of so voluminous an article. 

I took occasion to ask a very good friend of of mine, an honored ex-presi- 
dent of this association, and one who seldom errs in his opinion of men and 
things, if he did not think a five-minute article sufficiently long for any 
paper presented for the consideration of the association, to which he replied, 
"Five minutes is altogether too long for some papers." Not being a 
mind reader, I was unable to determine just what mental reservations he 
had made with reference to what I might attempt, and wishing to retain his 
good opinion, if possible, I concluded to make the paper as short as possible 
and thus lessen the chances of falling under his ban as well as yours. 


Our Civil Code, Sec. 2,546, defines insurable interest in the following 
language : 

"Every interest in property, or in relation thereto, or liability in respect 
of, of such a nature that a contemplated peril might damnify the insured, 
is an insurable interest." 

Thus it will be seen that it is not essential that the insured be the actual 
owner of the property; but such interest may consist either in : — 

1. An existing interest. 

2. An inchoate interest founded on an existing interest ; or 

3. An expectancy, coupled with an existing interest in that out of which 
the expectancy arises. 

A great variety of interests under each classification might be given, but 
a few will have to answer the purpose of this paper. 

Under the first may be classed actual title to the property, as fee simple, 
and the actual ownership of personal property. 

Under the second, there may exist an insurable interest in buildings 
erected on land held under contract to purchase, and on which payments 
have been made ; in buildings on leased land ; on leaseholds, etc. 

Common carriers have a right to freights earned, and therefore have an 
interest therein that is the proper subject of and frequently is covered by a 
contract of insurance. Depositaries have the same interest to the extent of 
storage charges earned ; and both common carriers and depositaries have 
an insurable interest in property in their possession to the extent to which 
they may be liable to the owners thereof. 

Under the third may be classed rents, whether the buildings are upon 
land owned in fee simple, or held under a lease ; expected profits on goods 
consigned to another for sale, etc. 



There are many insurable interests recognized by the courts, any one 
of which we may at any time be called upon to consider; as, that a husband 
may have an insurable interest in the property of his wife ; a wife or hus- 
band may have an insurable interest in property in which the fee simple is 
vested in the other, as when the land was purchased and paid for by the 
husband, the wife holding the title; a husband in possession of personal 
property, holding it under a verbal agreement of transfer from his wife, has 
an insurable interest therein. In fact there is an almost endless list of 
such interests as may be properly the subject of insurance, but it would 
serve no good purpose to enumerate them here. 

Of course it goes without saying that the character of the interest must 
be correctly stated, or the contract is avoided by concealment of misrepre- 
sentation, as the case may be. 

It is here that the necessity for well-informed and intelligent local 
agents and solicitors becomes apparent, if the way of the adjuster is to be 
made smooth, and misunderstandings and litigations are to be avoided. 


A close scrutiny of the records of probate courts would disclose the 
fact that there are many executors, administrators, guardians and trustees, 
who are the legal representatives of valuable interests which are insurable, 
and which the companies would be only too glad to carry, which have been 
entirely overlooked, and which could be secured by an intelligent and 
active local agent, who should be instructed to cultivate so fruitful a field. 

The adjuster is frequently placed in a position where it is of the 
greatest importance to the companies employing him, that he be able to 
decide promptly and correctly, whether the claimant has an insurable 
interest. If no such interest existed at the time the policy was issued, 
or took effect, the contract was void ah initio, for such interest must have 
existed when the policy took effect and when the loss occurred, in order to 
give it validity. 


Some decisions are to the effect that if an insurable interest existed at 
the time the contract was entered into and at the time of the loss, the 
rights of the insured were not lost by an alienation of such interest during 
a portion of the intervening period, but the preponderance of decisions 
is in favor of the principle that a contract once voided can only be restored 
to its original binding effect by consent of both parties thereto. 

If a policy be written where an insurable interest does not exist, the 
knowledge of such fact on the part of the company cannot be construed as 
a waiver, and the insured, being a party to the transaction, has no remedy. 

The careful adjuster will not be satisfied with the knowledge that the 
ownership of the destroyed property was vested in the insured at the time 


of the fire, if the case be one to which suspicion attaches, and where there 
is strong probability of moral obliquity on the part of some one, for an in- 
vestigation as to the circumstances under which the claimant became 
possessed of it may unearth a fraudulent transaction by which it will be 
apparent that the claimant has no equitable or legal rights under the policy ; 
or that conditions exist which would fully justify the company in denying 


Very trifling things sometimes lead an adjuster into paths by which he 
is able to ascertain facts of great value to his company, and he should never 
ignore what may at first glance seem of no moment. 

Our old friend Murray, who so well represented the South British & 
National in this field, once favored us with a paper upon what he called 
4 'Instinct in Underwriting." I maintain that instinct, to borrow his 
expression, reaches farther than the mere consideration of the desirability 
of a certain risk, for the adjuster is subject to impressions from some 
unknown source, which should never be disregarded, for they have frequently 
led to results of the greatest importance. Instinct often tells one that there 
is something wrong about a case in hand ; the leaves may whisper of conver- 
sations overheard; remarks are often made in your presence by parties 
wholly disinterested, and who may have no idea of what your business may 
be, or if they have, that what they may be saying has any bearing upon 
the investigation you are making. These things should never be lost sight 
of, but every thread should be followed until the end is reached. 


The adjuster may find that while the policy holder had an insurable 
interest at the time the insurance took effect, he had alienated it prior to 
the fire. In all cases where the least doubt may arise in his mind, he should 
carefully search the records of the county for evidences of transfer of title 
or interest. One need not be an expert searcher of records to do this, for 
any one can run over the indices of grantors and grantees; of lis pendens; 
mechanics' liens ; mortgagors and mortgagees, and readily ascertain such 
facts as will enable him to determine the ownership of the property in 
question. By such an examination I have been able, within a very limited 
period, to determine that claimants to amounts aggregating several 
thousands of dollars were wholly without insurable interests, and this 
too, in cases where no ordinary questioning would have disclosed the truth ; 
the claimants in each case having no regard for the sanctity of an oath, 
were prepared to testify to any condition of things to substantiate their 


An honest claimant cannot and will not object to a careful investigation 
of his loss ; and as to dishonest claimants, concede to no man the right to 
rob the company you represent, but zealously guard its interests by 


thoroughly investigating all circumstances which may by any possibility 
affect the merits of a claim. 

Although insurable interests are, and of a necessity must be, of a 
varied character, there should be no difficulty in determining the validity 
of any claim made for indemnity, for no one should attempt to deal with 
interests of such magnitude as an adjuster is called upon to consider, without 
fully preparing himself for the prompt and accurate discharge of the duties 
of the profession. I use the word profession advisedly, for a profession it 
is. and should receive careful preparation for the practice of it. 


I do not feel like closing this paper without a suggestion which is applic- 
able to many other questions than that of insurable interest, and that is 
with reference to waiver, although it cuts no small figure in the adjustment 
of losses where insurable interest is under consideration. 

A waiver is so easily created that the care ful adjuster will, before going 
into a preliminary investigation of a loss, the circumstances attending which 
are in the least clouded, take a stipulation from the insured to the effect 
that no act performed or demand made by himself, or by any representa- 
tive of the company, shall be claimed or deemed to be a waiver of any of the 
terms or conditions of the policy. You will observe that the acts of an 
indiscreet local agent or other representative of the company, which are, 
in many more cases than claimants are aware, such as the courts would 
unhesitatingly pronounce waivers, are nullified by the form suggested. 

I have treated the subject chiefly from the standpoint of an adjuster, as 
while acting in that capacity it has been most frequently, and at times 
very forcibly, brought under consideration, but in my opinion it would be 
the alphabet of our curriculum. 

I do not claim much originality in what I have presented, but I do claim 
that the importance of it is not fully considered, and because of such fact, 
and because the field men do not more carefully instruct their locals, is due 
much of that ignorance or carelessness which becomes apparent when a loss 
occurs, and should this paper inspire a closer investigation of the subject, 
and a more careful instruction of the local, the result aimed at will have 
been accomplished. 


The President — It seems to me that Mr. Swett has given us some 
ideas that ought to provoke discussion. We have time enough for 
it. and the subject is one which is worthy of attention. 

Mr. Carpenter — I don't like to be jumping up every time a paper 
is read and putting my oar in. but I feel inclined to say something 


at this point in reference to Mr. Swett's paper, not only in regard to 
the thoughts expressed therein, but also to express my satisfaction 
at the manner in which those thoughts have been presented. The 
thoughts contained in a paper like that will remain in the mind of 
every intelligent man. There are two points which bring to my 
mind incidents that occurred in my own experience. One was with 
reference to chance conversations and how they might affect us in 
regard to the cancellation of certain risks. Last year at one time I 
was coming from Nevada, where I had been to see some cattle that 
my friend Grant used to be interested in. I had ridden thirty miles 
from the ranch to the railroad. There I got a sleeping car. I didn't 
get up very early in the morning. I heard a gentleman, one of 
these loud-mouthed individuals, who always likes to have every one 
know that he is talking — in that respect he differs from insurance 
men — (laughter. ) He was on the other side of the car and had got- 
ten up early and wanted everyone to know it. He was talking very 
loudly about a fire that had recently occurred in Salt Lake, about 
the depression in the woolen business, etc. ; that there was no money in 
it: that wool could be bought at such a price, etc. I had had sus- 
picion about a certain woolen mill, and on my return home this con- 
versation that I had overheard while I was in bed that morning, 
brought that suspicion again to my mind and impressed it upon me. 
This same woolen mill burned ten days afterwards. I don't call 
that instinct. It is merely observation, but it is a kind of observa- 
tion that insurance men should cultivate to the utmost. The other 
case that I refer to was with reference to the searching of records. 
The keeping of an eye on the county records is something which 
every local agent should make a practice of. He should keep posted 
in regard to them even though he does not expect at any one time 
to make any particular discoveries. To illustrate that point: I was 
local agent many years ago in Helena, Mont. A loss occurred. A 
store was burned. It was a narrow one. After the fire I went to 
the county records to see how much land the insured owned. I 
found that the land which he owned came just between the brick 
walls on each side and didn't lap over the brick walls in the least. 
That was evidence to me that the man who built that store did not 


own the walls on either side of him, but that he had simply put up 
scantling and put a roof and front on. So of course the adjustment 
of his loss was regulated accordingly, his loss not being as great as it 
would have been had he owned the walls. When I placed the facts 
before him he said, ' ' Well, that is what comes of insuring with a 
local agent. If I had insured with a company down in San Francisco, 
they would never have dropped on that at all. They would have 
paid me for my brick walls." That illustrates the advantage that a 
local agent can often derive from consulting the county records. 

Mr. Gunnison — I came this afternoon with the firm intention of 
not saying a word, as I was somewhat laughed at this forenoon for 
talking so much. But the remarks of Mr. Carpenter have suggested 
some reminiscences of my own experience: and in regard to the 
searching of county records particularly. 

Several years ago I went to Fresno to adjust a loss of a dwell- 
ing-house which had burned down. I was sitting on the steps of 
the hotel looking towards the Court House, and it occurred to me 
that as I had leisure time it would be well to go over and examine 
the county records and see in whom the title to the property was 
vested — the insurable interest. I believe that is the subject under 
consideration now. I went over there: and as I had served an ap- 
prenticeship in the searching of records in this city a good many 
years ago, I felt at home in that occupation. It didn't take long to 
go through the records there. I found that the insured, some six 
months before the issuance of the policy, had transferred that piece 
of property to his brother. Of course I determined in my own mind 
that he had no insurable interest. So I had a meeting with him and 
told him that he had no insurable interest in that property. He 
admitted that he had sold it to his brother. The deed was on record 
in proper form. The consideration was a thousand dollars or more — 
I don't remember how much. But says he, t; The reason why I sold 
it to my brother was this: Some two or three years ago I unfortu- 
nately made the acquaintance of a woman and she was a woman of 
rather easy virtue and too rapid: but I lived with her two or three 
years and we lived together as man and wife. Then we separated: 
and it was suggested to me by a lawyer that it was possible she might 


sue me as wife under the laws of the State here and claim my prop- 
erty. So by his advice I put my property out of my hands, deeding 
it to my brother, to keep from being sued." Now, you can decide 
in your own minds as to whether he still had an insurable interest 
there or not. I consider it rather an interesting point. The case went 
through several hands and through the hands of different lawyers, 
and they had considerable contention over it as to whether the put- 
ting of that property out of his hands in that way to save being sued 
by a disreputable woman with whom he had co-habited two or three 
years, had destroyed his insurable interest in the property. I am 
not prepared to say. The case was compromised at last without 
being settled in court: but it was by my own exertions in examining 
the records of the county that the question as to his insurable interest 
was raised. 

Mr. Grant — Mr. Carpenter always lets us know something that 
happened in Montana. I would like to know whether his experience 
and that of his friends would lead up to the conclusion that it is good 
to let the local agents adjust losses, and whether he was specially 
affected in that case ? 

Mr. Carpenter — I am glad that Mr. Grant has made that ques- 
tion, because it gives me a chance. I don't believe in allowing local 
agents to adjust losses in any case. 1 consider that a great grievance 
that I was compelled to adjust losses when I was a local agent. I 
considered it a great grievance, because it puts one in a peculiar po- 
sition. I would much rather have had the special agent adjust it, 
or anybody else. 

Mr. Kinne — The most of us are of the same opinion. 

Mr. Carpenter — And the reason I don't believe in letting local 
agents adjust their own losses is, that from my own experience it was 
a very trying position to occupy. To solicit the insurance, get the 
insurance, and then when a loss occurs to have to stand right up and 
say i; here, I am representing a company, you can go just so far ancl 
no farther." They accuse me — "Well, I supposed, Mr. Carpenter, 
that you would deal liberally with me. ' ' An outside man can come 


in and adjust independently, and in a way which is perfectly satis- 
factory to both the company and assured, thus saving a great deal 
of bad feeling. 

Mr. Smalley — Mr. President, Mr. Carpenter was not like most of 
the local agents to stand up and say you could go just so far and no 
further. The most of them say go as far as you can. 

Speaking of chance conversation, I will speak of a little incident I 
had on the road when I went to adjust a dry kiln — this was shingles. 
I was sitting in a car and there were two men sitting in front of me: 
one was a drummer. And he was trying to sell a blower — a Boston 
blower — to this man for his dry kiln. And the man who owned the 
dry kiln said, " No, shingles are not worth anything. We can't sell 
them, and there is no use in going to additional expense. We have 
got to have a meeting of the Association to try to fix the price of 
shingles. That is coming off right away, and if we fix the price, 
maybe I will put in one of the blowers. " He said, "Now, I have got 
an old-fashioned blower, and I believe I will hang on and see what 
the meeting of the Association is going to do. " The drummer says. 
"Yes, but don't you know you are losing ten cents a thousand by 
drying with the old Excelsior kilns. " " Well, " the old fellow says. 
4 ' I have been waiting for mine to burn up so as I could put in one of 
these new things." I didn't listen to any more. I went back in the 
car, and on arrival at the town, got on pretty good terms with the 
local agent. I advised cancellation, but he thought it unnecessary. 
Shortly afterwards I was called in to adjust this loss, and in adjust- 
ing it I said to the man, " Well, did you succeed in setting fire to 
your kiln," and he wanted to know what I meant. I told him the 
conversation I had heard, and then settled with him for fifty cents 
on the dollar. 

Mr. Watt — It's too bad we cannot hear all those conversations. 

Mr. Grant — If I may be pardoned for getting up again — Speaking 
of conversations, it is not unfrequently the case that special agents 
and adjusters happen to travel together. They get talking over their 
experiences, in the car, where others, strangers to them, may over- 
hear their remarks on such and such a loss, what they did. etc. It 


often happens that they misunderstand the purpose of the conversa- 
tion and fancy that the insured has been improperly treated, not to 
say cheated, or his loss settled in a dishonest way. Such remarks 
cause unfavorable criticism on the insurance companies. 

Mr. Watt — We seem to be in a mood for reminiscences this after- 
noon. I remember Mr. Snow telling me once of his experience with a 
new local agent. After posting him up in agency work, they drifted 
into a friendly conversation and the local agent said, ' ' I suppose you 
have a great many crooked losses. " Mr. Snow assured him that the 
underwriters certainly sustained a good many crooked losses. The 
agent said, "How do they proceed to set fire to a house without 
being discovered? ' ' Mr. Snow told him some of the methods — among 
others, of boring an auger hole through the floor and letting a lighted 
candle down through the hole on a lot of waste paper or something 
that would burn easily. The agent seemed very much interested, 
and before the year was out Mr. Snow adjusted his loss and paid 
him in full. Of course he could not prove incendiarism. 

President Ives — Are there any further reminiscences? If not, we 
will call for the next paper : ' ' Insurance versus Underwriting. ' ' As 
he is not here, Mr. Osborn will read it. It is by Mr. Edward Brown. 

Mr. Osborn — Mr. Brown is having his time well occupied in other 
matters, and Mr. Craig, who happens to be present, but who was not 
known to be coming at this time, says that I better read it. 



At the first glance it might be supposed that on this topic but a very 
brief thesis could be written, and I can well imagine the hearers congrat- 
ulating themselves that at last a paper has come forth which must of neces- 
sity be very brief. But hold on, friends ! Think back a little ; review past 
experiences ; call upon your remembrances and see whether it is not a theme 
upon which the more one reflects the more the subject grows ! 

All of us, and all who have preceded us, wherever the science of under- 
writing has been known, have commenced our career by becoming what is 
commonly known as "insurance men." How very many of us have never 
advanced beyond that initiatory degree ! When the American citizen of 
Hebrew persuasion related to some interested friends the killing of his 
brother in a railroad accident, he was asked the question as to whether 


his brother had been badly mutilated. In excited tones and with upraised 
hands he exclaimed: "Mutilated! My goodness, they did not save 20 per 
rent of him! ,, Out of the great insurance fraternity, on the rolls of which 
there are hundreds of thousands of names inscribed, the percentage of those 
who graduate into the ranks of skilled "underwriters-' is far below the 
proportionate salvage of the unfortunate Hebrew gentleman referred to. 

"the insurance man." 

Briefly described, the "insurance man 7 ' is a man who knows how to get 
business. The "underwriter" is the one who understands how to write 
it. By the general public the terms are supposed to be synonymous : to the 
profession they mean two things often very widely apart. 

Gentlemen, let us indulge in a little retrospection: let us review the 
methods and practices of the insurance business as we know it. Policies of 
insurance are supposed to be contracts. This is a mistake. Contracts are 
things entered into with mutual obligations. Contract means "to make 
a bargain or covenant for." Originally each insurance policy was in reality 
a contract, because it always used to be based upon a written and signed 
application ; it had, in fact, a basis. It is to-day a contract in this sense : 
although drawn up wholly by the one party, it is accepted by the other. 
and consequently both are understood to be bound by its conditions and 
agreements. You all know how the courts of justice hammer away at these 
so-called contracts and how it is always claimed that an agreement, the 
language of which is selected by the one party and which the other party 
must submit to, must always be construed as against the drawer whenever 
there is any possibility of ambiguity. 


Even the supreme court of the United States, commonly claimed by our 
countrymen to be the most intelligent court in the world, has recently, by an 
evenly divided bench, affirmed the decision of a United States court of 
Appeals, which declared that the words "within twelve months next 
after the date of the fire" meant not twelve months from the date of the 
burning of the property, but twelve months commencing to run from some 
later date, such, for example, as sixty days after the filing of the proofs. 
This decision, mind you, is not a repetition of the fine drawn one. which, 
being based on the words, "twelve months after the occurrence of 
the loss," claimed that the loss did not take place until the maturity of 
the claim. In this instance to which I refer the word "loss" is not used. 
The clause is, "twelve months from the date of the fire." The supreme 
court of the United States in effect decided that the fire did not occur when 
the property burned, but that it did happen on the sixtieth day after the 
filing of the proofs. 

Taking it for granted that the insurance contract or policy will always 
be subjected to the most searching criticism, and that in the event of suit 
every pretext will be sought to translate it in favor of a claimant and 
against the company, how absolutely essential it is that both the printed 


ana written portions (more especially the latter) should be framed with the 
greatest care ; that it should be made to express the actual meaning of the 
two parties thereto ; and that no loophole should be left, through careless 
phraseology or ambiguous language, whereby it can be perverted to mean 
something never intended. 


It will not be disputed, I think, that the written portions of policies 
habitually issued are framed with but little reference as to how they will 
be construed after the fires occur, and that only the very smallest modi- 
cum of intelligence and good, plain, common sense are displayed in drawing 
them up. I need not give samples. You are asked to take up the policies 
issued from your offices on any one day of the week, read them very care- 
fully, analyze them and I believe you will agree with me that perhaps 
not one in ten is worded as it should be. It is a notorious fact that in parts 
of the Coast field, which formerly were more or less tributary to Chicago, 
a far better and more business-like form of policy is used than in the 
districts which have always reported to San Francisco. The inference can- 
not be otherwise but that Chicago managers and Chicago special agents are 
more intent on having good methods and proper forms used than we in San 
Francisco. It cannot be gainsaid that in some points we are ahead of 
Chicago. Our policies are better divided and the insurance more specifi- 
cally written, but that is the whole. 


We select haphazard two daily reports, one covering a building in Denver, 
the other a San Francisco building, to-wit : 

"On his two-story and basement brick, metal roof building, including 
water and steam pipes, fittings and connections, sidewalks, foundations and 
area walls, occupied, basement for storage, grade floor restaurant, under- 
taking establishment and music store, second floor dancing academy — all 
privileged to be occupied for purposes not specially hazardous — situate Nos. 
1545 to 1551 (inclusive), Champa street, Denver, Col." 

"On his four-story frame building, situate No. 427-9 west side of Larkin 
street, between Turk street and Golden Gate avenue, San Francisco, Cal. 
Other insurance permitted. " 

What a contrast ! And how proud we San Franciscans should be of 
our way ! No waste of time or ink ; no foolishness ; everything simple and 
expressionless as a baby's face ! 

In this consists one of the many points between an "insurance man" 
and an "underwriter." The "insurance man" — the premium getter — 
dominates the policy forms. He brings into your office a printed or written 
form and requires that that should be your language when writing out 
the contract. If he is an ignorant man, his form is crude, incomplete, 


perhaps contradictory in its terms, omitting precautionary and descriptive 
Language, which should always be used. If he is a shrewd, bright chap, 
and of course these adjectives characterize the great majority of "insur- 
ance men," then he has carefully drawn his form so as to favor his client in 
e very particular; has omitted all reference as to occupancy ; has said just 
as little as possible about construction ; has placed no limitations upon any- 
thing; and has made his form just as broad and as comprehensive as 
possible, so that it can be construed to cover anything and anywhere. 


Perhaps in no one particular is bad underwriting more fully demon- 
strated, or more fully shown, than in consenting to the use of the various 
— iniquitous, it might be said — mortgagee clauses. It is bad enough, in 
all conscience, to agree that no act — which means criminal or otherwise — 
of the assured shall affect the interest of the mortgagee ; but to agree 
also that the mortgage may be transferred from hand to hand, without 
notice or consent of the company, thereby making it necessary to trace it 
up and to find out the real owner so as to be able to notify him of a desire 
to cancel the policy; furthermore, to agree to the abandonment of the 
contribution clause, is a surrender of the company's rights which cannot be 
justified by any local, district or general agent, or by any company manager. 
It is not underwriting, and there is no defense for it. 


So far, under the term "insurance man" I have had in view the local 
agents, city agents, brokers and solicitors, but if we turn to other grades, 
to district agents, general agents, company managers, we will find that 
very many of them come under the same heading. On nearly every subject 
brought before them their view is that of the premium-getter. They 
shrink from assuming any stand which may possibly lead to the loss of a 
few premiums. They overlook the point that there are other matters of 
much greater importance to the interest they represent than the question 
of a few dollars more or less. They weakly yield to the requirements of 
those who bring them the business, knowing at the same time that what 
they do is not only weak, but unjustifiable. The safe-guards, which the 
cautious business man should never disregard, are yielded one after 
another. When loss claims are presented, they yield again, and will yield 
almost everything to the claimant who has property, position and sufficient 
stubbornness to stand out for everything in sight. 

"the other fellow." 

If there are other companies, other managers or general agents, 
interested with them in a loss, they will use every effort to shirk responsi- 
bility themselves and endeavor to saddle it upon some one else. By innu- 
endo, implication, if not by direct language, they give the claimant to 
understand that it is the other fellow who is to blame for everything and not 


they. Should there be an intricate adjustment pending, in which they are 
not at all interested, they will lose no opportunity, in fact will seek every 
possible chance, to say how differently they would have acted had they 
been interested. In their efforts to build up business they will throw 
aside manliness, self-respect, good faith, often times honesty too, in order 
to secure an advantage over their competitors. Over-insurance is freely 
permitted ; loosely-worded policies issued ; exaggerated claims — often times 
fraudulent ones — entertained ; and losses paid when they well know that 
the higher interests of the profession and even of their own company or 
companies demand that a different course should be pursued. 


If you search still higher ranks and go amongst the executive officers 
of the numerous American and foreign companies, whose names are house- 
hold words, you will find that the "insurance man" is there too. Don't 
you know of men who have been selected to fill the responsible positions of 
district or general agents, who are almost without every qualification 
fitting them for their work \ Have you not seen how men have been selected 
from commercial ranks and from other walks of life to fill positions for 
which they have had no training, and that, too, in a business which 
requires that to become competent it should be made the study of a life- 
time ? Do you not know of district agents who really know but little more 
of the business which they have been selected to manage than some of 
the junior clerks in their own offices \ Is there any other profession or busi- 
ness where such things are done \ Is a landsman, without any knowledge of 
navigation, selected as the captain of a merchant vessel ? Is a layman who 
has never been permitted to practice ever appointed as a judge? Such 
appointees have no doubt been selected because it was supposed that they 
could influence business. In this and in many other respects the company 
manager, be his title president, secretary, or what-not, manifests the 
same lack of appreciation of the necessities of the business as does the 
district agent whose methods have just been described. 


The writer well remembers that when the old president of a very prom- 
inent Philadelphia company died, his successor was selected from the direc- 
torate instead of from the rank of educated underwriters, as common sense 
should have dictated. In Europe they manage these things better. There 
the president is practically chairman of the board of directors. He has 
nothing to do with the underwriting. That is entrusted to a manager, and 
the manager is selected because of his record as an expert underwriter ; but 
in the United States the president of the company is usually the dictator of 
its business affairs. He is the captain of the ship. Now this particular 
director, who was elected president, had been a successful dry-goods man. 
Two months after his assumption of the presidential chair he told a friend 
that he was utterly astonished to find how readily the fire insurance busi- 
ness could be mastered. Two years thereafter he frankly admitted to the 


same friend that he had been in error and was only just beginning to under- 
stand the rudiments. So you see that throughout the entire profession the 
11 insurance man" is frequently found occupying the place which should be 
filled only by an "underwriter." 

It is only the thoroughly well informed man who understands and cheer- 
fully admits how little he knows. I have no doubt that there are a great 
many men in our business, presidents, secretaries, managers, general, dis- 
trict and local agents, who would be very indignant if it were hinted to 
them that they might be ' ' insurance men ' ' but not ' ' underwriters. " It is 
but fair to say that this abnormal condition of things is very greatly dimin- 
ished now as compared with a couple of decades back. Good "under- 
writers" are to be found occupying positions in all parts of the country, 
north, south, east and west, but the idea is still too prevalent at headquar- 
ters that nearly all of the skill and intelligence in the profession is to be 
found there, or near by. 


About fifteen years ago a general agent from this city was in New York 
at the time when the National Board was holding its annual session. His 
company extended to him the courtesy of an invitation to the dinner at the 
windup of the session. There was a large gathering ; most of the shining 
lights of the profession were there, and there were many very clear-cut and 
even brilliant speeches made. Along towards midnight he was astounded 
when Mr. Geo. T. Hope, the Chairman, called upon him to speak for the Pacific 
Coast. He had never, he told me, made a speech in his life, and felt a great 
deal more like going through the floor than standing up before such an audi- 
ence. Summoning to his aid that important essential in our profession, 
vulgarly termed cheek, he did succeed in maintaining an upright position 
for a short period, in which he deprecated the wisdom of the call upon an 
uninformed Californian to speak upon the subject of insurance before men 
who were past-masters in the profession. 

He said that New York was the fountain head of insurance knowledge ; 
that the stream which flowed from this fountain reminded him of certain 
streams on the Pacific Coast which issued from the mountains bank full, but 
which, through absorption and seepage, never reached the sea. It flowed 
from New York, but being absorbed as it traveled westward by the various 
states and towns, it very rarely got beyond Chicago, and never reached San 
Francisco. The only insurance knowledge that was possessed in the latter 
place was the simple plan of charging sufficient premiums to pay losses and 
expenses, and a trifle over. This was all that was understood in San Fran- 
cisco, and therefore the speaker could not enlighten or interest his hearers 
on any of the scientific topics pertaining to the profession. 

This little speech was received in dead earnest by the hearers, and one 
of the gentlemen, prominent in New York, told the president of the com- 
pany, which the Californian represented, that his San Francisco agent had 
done very nicely ; that he was a sensible fellow and manifested it by not 
claiming to know more than he really did. 



One is sometimes led to question whether the "insurance man" is not 
too numerous in the management of the affairs of the Pacific Insurance 
Union. The writer may be quite wrong in his conclusion, but often times 
the idea presents itself very strongly to him that a little more foresight in 
shaping its course would result in a different tack being followed in some 
particulars. It would seem as though the true underwriting principle 
would be to collect from our clients no greater assessment than is necessary 
to pay probable losses, necessary expenses and a fair margin of profit. If 
this idea were intelligently followed and applied to every part of the Coast, 
nine-tenths of the troubles which the Union has labored under ever since its 
organization, and which now threaten to result in its speedy dissolution, 
might have been averted. Every person who has carefully and intelligent- 
ly studied the subject knows that there are the utmost diversities of both 
physical and moral hazard in this field commonly known as the Pacific- 
Coast. Our own state alone has about all of the climates to be found 
between the 20th and 60th parallels of north latitude, or from Cuba to 
Greenland. We have regions where frost and snow are utterly unknown, 
and we have places where it freezes nearly every night in the year. There 
are districts where rain and fog are almost continuous, and there are others 
where scarcely enough of moisture falls to settle the dust. Between east- 
ern Oregon and Washington and western Oregon and Washington there is a 
difference of climate which can only be realized by those who are familiar 
with both sections. In one there is an extraordinary precipitation, an 
atmosphere that is moist nearly all the year around and a remarkable 
absence of high winds, and also very little of extreme heat or cold. East of 
the Cascades are to be found intensely hot weather in summer and very 
cold winters, but little rainfall and a wind that blows a gale day after day 
and week after week during certain periods of the year. In Idaho, Mon- 
tana and Utah the physical hazard varies from that of the districts before 
. mentioned, and also varies one from the other. 


It is no less understood that the moral hazard is almost as diversified as 
the physical. In the older, settled portions, such as in central California, 
in the vicinity of Los Angeles, in certain of the Coast counties, in the Will- 
amette valley in Oregon, in the "Sound" country of Washington, etc., etc., 
the moral hazard is and has been excellent; but if we take the other 
portions of the Coast which have been boomed and which have attracted a 
floating population, adventurers from all parts of the universe, there we 
find the moral hazard to be of the very worst possible character. An intel- 
ligent system of rating would take cognizance of all these facts, which are 
patent to every one, and would vary the charges for insurance in corre- 
spondence with them. It is not to be denied that the Union has used differ- 
ent bases and varying charges for exposures, etc., but notwithstanding this 
it is a well recognized fact that under the existing tariffs and special 
ratings certain sections have been generally unprofitable, whilst others 


have been continuously profitable. Companies and managers have striven 
hard to get, each of them, more than a fair share of the business in the favor- 
able localities, and to accomplish this many of them have paid extravagant 
and unauthorized remuneration to their agents. To this, more than to any 
other one thing, or perhaps more than to all others put together, has been the 
disturbing element in the Union, and has on more than one occasion brought 
it to the very throes of dissolution. Time and again peace has been patched 
up only to be again broken. Last summer a move in the right direction was 
made, rates were advanced in certain counties in this state, but had that 
been followed up, as it should have been, by reductions in other counties, 
where it was well understood that the business was extremely profitable, 
the recent and still existing troubles would, most likely, not have occurred. 
I claim that "underwriters" should foresee and provide against all dangers 
of this kind, should disarm antagonism, should cultivate the good will of 
their clients, and should aim to popularize their methods, just as mercantile 
people do. A strong hand should be used, whenever necessary, in self- 
defense, but at all other times it should be well gloved. 

The subject grows as one writes upon it, and it is not too much to say 
that it could be continued, like the serial story, to an almost indefinite 
length, but this paper is already as long as your patience will permit of and 
it therefore shall be concluded, possibly to be taken up on some future occa- 
sion or in some other manner. 

Asking your forbearance for trenching upon your time as much as has 
been done, 

Very respectfully yours, 



President Ives — There is a good deal of food for thought, if not 
action, in Mr. Brown's paper. Have any of the members anything 
to say? 

Mr. Watt — Just for the purpose of starting the ball rolling, I will 
call special attention to that feature of the paper which refers to bad 
faith and excessive rates in certain localities. Now, the question 
arises as to whether the system of rates adopted by the Pacific In- 
surance Union does not take away from the special agent a great 
deal of responsibility which in former years rested upon him. It is 
a fact that most special agents are expected to get business: that is 
what they are sent into the field for. I doubt if a special agent would 
make headway rapidly by devoting himself entirely to supervising 
and not at all to getting business. In my inspection slips I have the 
question, In case of competition, what rate would it be prudent to 


accept rather than lose the risk? Thus I am gradually getting on 
file reports of what my special agents think of the different risks 
throughout the country, so that if there was a free fight we would 
know how to decide in reference to risks on our books — moreover it 
makes the special agent think as to the adequacy of rates, for he is 
constantly going on record. 

Mr. Gunnison — I think that shows that Brother Watt is an under- 
writer and not an insurance man. 

Mr. Kinne — I would like to inquire of Mr. Watt as to what he 
means by the special agent getting business. I do not fully grasp 
the idea, whether getting it personally or getting it by urging the 
local agent to be more assiduous in his endeavors to secure business 
in his vicinity. If it is that, it seems to me it is the duty of the 
special agent to do the latter. 

Mr. De Veuve— I don't agree with Mr. Watt altogether. I think 
that it is necessary to employ men who are able to secure business on 
a legitimate basis. It would seem that the average special agent 
should be able to control and secure business. I maintain that the 
special agent is one who performs the duties required of him by the 
company, but who will refuse business simply because it is business, 
and will accept business because he can get it as a paying proposition. 
Those of us who are not permitted by our managers, to pay excessive 
commissions, cannot meet competition, and pick out the agent that 
will give us the business that will prove profitable, even if it is not so 

Mr. Carpenter — Mr. President, Col. Kinne is not in the room, is 
he? If not, I will venture to make a remark because I don't want to 
get into an argument with him. We all believe that because a girl 
has got money she would not make any the less a good wife, and I 
don't think because a special agent is able to get business, that he, is 
any the less qualified to inspect risks and act as a first-class special 
agent. I don't believe in a special agent going around and acting as 
a solicitor. It seems to be put forth once in a while that it is beneath 
the dignity of a special agent and entirely outside of his province, to 


take in a risk when he has a chance to do it. I believe the majority 
of gentlemen here present will agree with the idea, that because a 
special agent is able to get business, he is none the less a good special. 

Mr. De Veuve — I think an intelligent special agent will endeavor to 
pick up all the business that he can as he travels. 

Mr. Watt — I said nothing that could be interpreted as favoring 
a special agent's getting business by independent soliciting. He 
should act with or through the local — but he must get or be the 
means of getting business; there are many other qualifications to be 
considered in the selection of a special agent. 

President Ives — If there is no further discussion on the subject. 
we will hear Mr. Low's paper: "The Underwriters' International 
Electric Association. ' ' 

Mr. Low reads. 


The Underwriters' International Electric Association owes its existence 
principally to the exertions of Mr. C. M. Goddard, secretary of the New 
England Insurance Exchange, and Mr. F. E. Cabot, superintendent of the 
Boston Fire Underwriters' Union, each of whom, in his capacity of electrical 
inspector, had been brought to realize the necessity of ferreting out every 
possible fire hazard of electricity, of enlarging the field from which inform- 
ation concerning these hazards is to be obtained, of formulating require- 
ments that, from an electrician's view, shall act unfailingly in attain- 
ing the desired end. Above all was appreciated the fact that so long as the 
electrical requirements of various underwriters' organizations were at vari- 
ance in their ideas in regard to devices or methods of construction that 
offered immunity from the electrical hazard, just so long would the advent 
of harmony between the two great interests concerned be deferred. 

Electricians the country over would think if not say, that "when under- 
writers have agreed among themselves what constitutes safe construction, 
then and not until then will we give their rules unqualified endorsement.'* 
In my own experience I have often been confronted with a statement to the 
effect that construction I had demanded was not required elsewhere, or per 
contra, very frequently I have been charged with permitting forms of elec- 
tric construction that would not be tolerated for a moment in the East 
Underwriters were, therefore, justly open to criticism the country over in 
that they were divided against themselves. The necessity for national 
standardization became a crying need, and from that need has develop 


organization that, though yet young, has materially assisted in cementing 
insurance and electrical interests, from the Atlantic to the Pacific, in the 
strong bond of united purpose. -The fire hazard of electricity is an evil to 
both interests. Its suppression is for mutual good, and in the organization 
of the Underwriters' International Electric Association rests the most prob- 
able means of deriving the solution of most momentous questions. 


The history of the formation of the Association, though of interesting 
detail, must find no place in a business paper prepared for substantial bene- 
fit. More extended reference must, however, be made to its further aims, 
and to the work accomplished by it and in prospect. The Underwriters' 
International Electric Association has enlisted the co-operation of every 
important insurance organization having primary jurisdiction in the United 
States and Canada. Its rules are their rules; their experience is its experi- 
ence. Its list of officers and members contain the names of some of the best 
known insurance men and nearly all the underwriters' electricians in the 
country. It holds at once the confidence, the co-operation and the good 
will of both underwriters and electricians, and with their support it consti- 
tutes a most valuable adjunct in restricting the fire waste. 

The facilities presented to this organization for the collection of instruct- 
ive data concerning the fire hazard of electricity and the best methods for 
its restriction are noteworthy. Each electrical inspector becomes, as it 
were, a census agent of the Association. He is not like the ordinary elec- 
trician, tied down to his own plant and to his own individual experience. 
The electrical inspector meets all electricians and reaps the benefit of their 
experience, which becomes the property of the Association. Each fire of 
electric origin is promptly reported to every member, who has thus held 
before him a constant reminder of those details of electric work which 
require the greatest watchfulness. 

As yet the chief aim of the Association has been in the preparation of 
rules which, if carried out, will assure safe electric work. Inspection is 
necessary to carry out these rules ; hence, after all the matter of safety 
from electric wiring becomes one of inspection. If the Underwriters' Inter- 
national Electric Association has erred in any detail, it has been from insuf- 
ficient consideration of this most vital topic. In order that the work 
accomplished by the Electric Committee may be the more thorough, its 
members have been divided into permanent sub-committees, each member 
having some particular branch allotted to him which he makes his special 


The matter assigned to me, viz : "Inside Wiring, Concealed and in Wire- 
ways," is one which inspection or the absence of it frequently renders at 
once perfectly safe or extremely hazardous according to the integrity of the 
wireman. If it is a fact, as is charged, that to the use of electric wiring is 
due the abnormal increase in the number of fires from unknown causes and 


the enormous losses consequent thereto, then upon the sub-committee on 
''Inside Wiring-, Concealed and in Wireways," rests the great responsibil" 
ity of finding a solution of what is said to be one of the most serious prob- 
lems that confront fire underwriters. If the evil is so great, and if, as has 
been stated, as the applications of electricity increase, so insurance earnings 
decrease, why not apply a heroic remedy ? The deeper you delve the clearer 
you see that inspection affords the only surety for safe work. You cannot 
stop the use of electric light; you cannot materially check its development. 
It is too popular. You cannot afford to maintain an electrical inspector in 
each town, nor can you ask that, if your inspector is not at hand, the work 
on buildings shall cease until after his arrival and inspection. Neither can 
you demand that all wires be run exposed on finished surfaces. 

Wires must, like gas-piping, be run behind plaster, between walls and 
beneath floors. And it is the wire so concealed that makes the mischief. It 
is thoroughly out of sight, and if it were nothing more than out of mind, no 
harm would come. From a fire standpoint, it is an absolute impossibility to 
satisfactorily inspect wiring that is concealed and inaccessible. By no 
known means may reliable information be derived that will carry with it 
the assurance that such concealed and inaccessible wiring presents no fire 
hazard. A visual examination alone will do that. Then, I ask in all fervor, 
why not require that all concealed circuits be so placed that they may be 
rendered accessible for such visual examination as will warrant your 
inspector in assuring you at any time whether the wiring is safe. There is 
nothing visionary, nothing chimerical about this. It is fact, not fancy, and 
if a remedy so simple yet so positive is not worth the trial, then all talk of 
the enormous fire waste from the use of electric wiring becomes but prat- 


These conclusions led to the introduction of a resolution at the recent 
Chicago meeting of the Electric Committee, which so clearly set forth other 
advantages in favor of such accessible construction that they are repeated : 

Whereas, Under existing practices, but extremely few of the buildings 
in the United States which are wired are inspected before being closed in 
by lath and plaster, and 

Whereas, An inspection after such closing in is incompetent and worth- 
less, for the reason no means are known to the electrical profession by which 
a fire hazard of concealed or inaccessible circuits may be determined, and 
that a visual examination of all circuits must be had before immunity from 
fire hazard can be assured, and 

Whereas, By reason of such non-inspection the work of incompetent and 
irresponsible electricians remains forever permanently concealed and unin- 
spected, thereby affording ample opportunity for evading the requirements 
for safety, for practicing gross impositions upon the fire underwriters and 
the public, and imperilling millions in property valuations, and 


Whereas, Only through the use of insulating wireways is it possible to 
render concealed wiring permanently accessible, and 

Whereas, Such permanent accessibility renders it possible to thor- 
oughly inspect at any time every installation so wired, and insures trust- 
worthy means for the detection of every piece of defective wiring of 
whatever nature ; therefore be it 

Resolved, That the use of such insulating wireways for rendering con- 
cealed wiring permanetly accessible, be and hereby is most heartily 
endorsed and recommended, and be it further 

Resolved, That such methods of accessible concealed construction be and 
hereby is advised for general use. 


In the adoption of this resolution by the Underwriters' International 
Electric Association, the use of a system that must ultimately become the 
universal plan of interior wiring was adopted. When organizations such as 
your own give, by resolution or otherwise, expressions sustaining more pos- 
itive action or, better still, when insurance organizations having primary 
jurisdiction give suitable assurance of support, then only may the Under- 
writers' International Electric Association contemplate the annihilation of 
the hazardous inaccessible construction now almost universally counte- 
nanced, and occupy the sweeping and impregnable stronghold of Perma- 
nently Accessible Construction for Concealed Wiring. 

It is the opinion of the writer that the existing rules of the Underwriters' 
International Electric Association accomplish the installation of perfect 
work, with the single proviso that all work is competently inspected before 
being covered up. Inspection is absolutely indispensable, and, as stated, an 
insufficient consideration of the most approved means of accomplishing it 
forms the only weak feature of the present requirements. 

The work accomplished by the Association has been of the greatest value, 
but of almost equal importance are the tasks before it. Each new or im- 
proved device for effecting further safety passes through its hands for 
examination and approval. Its testing of insulations and apparatus is done 
by one of the most reliable electrical engineering concerns in the country, 
and its members are in constant communication each with the other con- 
cerning new devices, new hazards and new experiences. The subject of fire 
alarms, both municipal and automatic, is now receiving earnest attention, 
and it is now confidently believed that when the practical requirements for 
this service have been determined upon, fire alarm systems conforming 
thereto will be impossible of failure. 

The development of electric heating and cooking devices, the impairment 
of sources of water supply by electrolysis from electric railways, the hazards 
of aerial or underground circuits, and, in brief, all the infinite applications 
of electricity and underwriters' interests incident thereto, receive its 
most careful consideration and its conclusions are proclaimed in require- 


ments aimed to cover every deficleny. All will concede that its conception 
was magnificent and that its utility is of the greatest value. 



President Ives — We thank Mr. Low very much for his valuable 
paper. It is apparent from what Mr. Low tells us that it is not a 
matter of hazard whether the electric system in a building will 
prove dangerous or otherwise, that it is a matter of inspection, and 
such inspection is absolutely able to be had, provided certain condi- 
tions are to be met. I think some arrangements or some committee 
should be appointed to take the matter in hand with reference to 
the Pacific Insurance Union being asked to consider the matter, and 
if thought necessary, act in accordance therewith. By so doing it is 
apparent that dangers which now circumvent the uses of electricity 
would be duly discussed. 

Mr. Carpenter — I would like to ask Mr. Low what devices have 
been made for the purpose of rendering wiring at all times acceptable. 

Mr. Low — Replying to Mr. Carpenter's privilege, there are in use 
two methods of accomplishing this end. The first is through the use 
of wood mouldings, that is, wooden strips that are grooved so as to 
confine the wires, that amply protect the wires, keep the air from 
them. The second is laying wires when the building is constructed. 
There are several instances of this in recently constructed buildings 
in San Francisco, where the electric light, telephone, messenger and 
bell wires are put into a building entirely concealed from view, and 
yet are accessible for examination at any and all times. Wireways 
consist of materials thoroughly impregnated with fire-proof materials, 
and I maintain that the greatest possible advantage to both insurers 
and insured accrue from their use. As the paper says, the system is 
simply impregnable. 

Mr. De Veuve — Mr. President, I would like to ask Mr. Low. for 
myself and the Association, what strength the incandescent current 
has to possess before it creates a fire hazard. I have been told that 


an ordinary incandescent light does not create any hazard, so if it 
does. I would like to know. 

Mr. Low — There is no question but that the greatest portion of 
fires from known electric sources are due to arc circuits, which carry 
currents of very high pressure. The maintaining of the insulation 
of such circuits becomes a matter of difficult solution, as it depreciates 
rapidly and requires constant watching. These remarks are exclusive 
of the hazards of railway trolley circuits, which appear to be beyond 
satisfactory control so long as existing methods of electrical con- 
struction are adhered to. With arc lighting, the current is of small 
volume (about 10 amperes) at high pressure, from 2000 volts up- 
wards. Incandescent wiring carries current at low pressure but of 
volume increasing directly as the number of lights. The heating 
factor of any electric current is found in the ampereage; the break- 
ing down of insulation with a perversion of ampereage entailing fire, 
is due to the voltage of the current, all as fully described in the pa- 
pers I have had the honor to present to this Association. Obviously 
then Mr. De Veuve's information to the effect that an ordinary in- 
candescent light presents no fire hazard, is incorrect, when it is so 
placed that its current may be perverted. 

Mr. Smalley — I want to ask Mr. Low if he has not found in most 
of these plants scattered around through the West, that they use the 
same wires to run the current in an arc light and an incandescent 
light — that is to say, are they not to be found in many places, and 
that it is not almost an impossibility to provide against it. I have 
seen an arc light on the outside and an incandescent inside, all over 
the same wire. That being the case, they are certainly dangerous. 
I have known several fires to come from that very cause; the wire 
was certainly overcharged. 

Mr. Low — In the earlier days of electric lighting it was frequently 
the practice to place arc and incandescent lights on the same arc cir- 
cuit through the use of the multiple-series system of electric distri- 
bution. This has been found to be a very hazardous practice and 
its use is now prohibited. The condition then presented has now 
been reversed to excellent advantage, as arc lamps are now often 


burned from low pressure incandescent circuits. This new method 
reduces the hazard in that it eliminates the use of high pressure 

Mr. Swett — I would like to ask Mr. Low the question if. in his 
judgment, how far the sparks or flakes thrown off by the burning- 
carbons will fall before they are cold or become extinguished. 

Mr. Low — That depends upon what Mr. Swett terms a spark. A 
spark is merely a particle of carbon dust, which is most minute and 
cools at once. I have endeavored to ignite tissue paper with such 
sparks and was never successful. Flakes are of varying size and 
usually fall into the globe and are white hot. 

The most potent hazard is in the use of copper plated carbons for 
arc lamps. The reason for that is this: Globules of copper are 
thrown off from copper plated carbons in a red hot state. They 
easily imbed themselves into the inner surfaces of the globe, and 
every time the globes are swept out there are a large quantity of 
copper shot which were once red hot and have cooled off. I have 
seen a sheet of plate glass with splashes of copper from an arc lamp 
imbedded in it. The distance was 60 inches that the shot had to 
fall, and they actually contained heat enough to imbed themselves 
into the glass. The hazard arising from placing ignitable materials 
under arc lamps must now be apparent. 

Mr. Swett — I had two cases, one of which was a claim by the as- 
sured that the fire originated from flakes thrown off by the carbon. 
The carbons, of course, were entirely within the globe, the bottom 
of the lamp was entirely closed. One of those was on Kearney street 
near Sacramento, year and a half ago. The bottom of the lamp was 
entirely closed — no room whatever for the shot to get through, nor 
was the globe broken. I had one in San Jose, in which we accepted 
the theory of hot shot as a basis, and I think that was correct, be- 
cause the lamps were open, and permitted the globules to drop 
through, and ignited the clothing. That was the point I wish to 
arrive at. 

Mr. Grant — One question more: Do the two wires go together 
through the same conduit? 


Mr. Low — I have always maintained that it is a good and safe 
practice to run the two wires through one tube. I will be very glad 
to read you the report I have submitted to the Underwriters' Inter- 
national Electric Association. Of course I will await your instruc- 
tion in that matter. 

President Ives — I think the Association will be very glad to hear 
from it. 

Mr. Watt — While he is out of the room let me say, I hold in my 
hands the rules adopted by the Pacific Insurance Union, published 
in a little pamphlet, copies of which can be had on application to Mr. 
Low, free of charge. 

Mr. H. H. Smith — In some of the permits granting use of electric 
lights, there is a warranty put that the arc lights must be protected 
by spark arresters. The other day I had a case in a store — the store 
of Weinstock & Lubin, of Sacramento, where they have some eigh- 
teen arc lights, none of which are protected. I expressed my sur- 
prise at the fact, and the manager, Mr. Phipps, said that Mr. Low 
came there, and thoroughly examined the circuit and pronounced it 
perfect, but whether that was prior to putting in the arc light, I 
don't know. When I came back to San Francisco, our Mr. Conroy 
of the Pacific Insurance Union stated that the spark arresters were 
not used. I would like to ask Mr. Low about that. 

Mr. Low — The matter is one of course that is very familiar to me. 
The first use of the spark arresters was due to the impression that 
the sparks I have described were the cause of many of the fires at- 
tributed to arc lamps which resulted in the promulgation of the 
warranty referred to and which has never been enforced. 

Preliminary to the reading of this report, I may state that it was 
brought about by an action taken at the Boston meeting of Under- 
writers' International Electric Association last September, which 
compelled the use in the wireway system, of two tubes through which 
to run the wires independently — separate tubes throughout. I have 
found upon examination, and I think that report conclusively proves, 


that only benefit accrues in running ultimate wires in the same tube. 
(Reads report. ) 


& M. Goddard, Secretary Underwriters' International Electric Association, No. 

55 Kilhij Street, Boston: 
Deab Sik: 

The permanent sub-committee on Interior Wiring and Wireways has to 
report as follows with reference to the proposed amendment "E" to Rule 
22 (edition of October i, 1893), requiring that "wireways must not be sup- 
plied with twin conductors, or two separate conductors, in a single tube." 

If two wires of opposite polarity are in actual contact throughout their 
length, trouble may occur in the following ways : 

Case 1 — Overheating of the conductors from a dead or partial short cir- 
cuit, the circuit being excessively fused. 

Case 2 — A dead or partial short circuit or a heavy leakage in an excess- 
ively fused circuit may burn off a wire at the point of contact, which may 
occasion — 

Case 3 Arcing, the heat of which will cause — 

Case 4 — Ignition of the insulation. 

Case 5 — The insulation, if wet, may be ignited from electrolytic action. 

Case 6 — A partial short circuit or current leakage resulting in the elec- 
trolytic liberation and ignition of explosive gas. 

Assuming these wires to be in contact throughout their length and 
exposed in open air, incipient fire will be caused by the occurrence of any 
accident except that cited in Case 6, in which the gases will be dissipated 
and rendered non-explosive. Case 6 presents the only hazard distinctive to 
wireway construction, in which the liberated gases are confined, but, as 
yet, the hazard is a theoretical and not a practical one. But one accident 
that might be attributed to the cause assigned in Case 6 has been cited. 
In this an explosion occurred in a vertical conduit imbedded in a side wall. 
No fire resulted therefrom and no damage occurred beyond the breaking of 
plaster. Considering the fact that a short circuit will sometimes occasion 
considerable violence, it is as probable that the accident was due to this 
cause as to an explosion of liberated gases, as charged. 

But admitting for the moment that the explosion did so occur, it could 
only have been due to the presence of moisture in the tube. If the ends of 
interior conduits are closed, per Rule 22, circulation of air through the tube, 
with consequent condensation and precipitation of moisture, is rendered 
impossible. The explosion would then be the direct result of a violation of 
the requirements and would be chargeable accordingly. Again, conditions 
favorable to condensation within tubes are far more propitious in fire- 


proof buildings than in wooden ones, which further depreciates this hazard. 
The opinion is held, therefore, that the occurrence of fire per Case 6 is 
extremely improbable, if not impossible. 

Cases i to 5 inclusive resolve themselves into two ultimate classes when 
the conductors are exposed in air. They must also be contiguous to ignitable 
material, otherwise fire could not ensue. These two classes are : 

i. Ignition of foreign inflammable material from a heated wire, and 

2. Ignition of foreign inflammable material from the flame of burning 
insulation or of an arc. 

It may appear that Class 2 embodies the situation, but experiment proves 
Class 1 (Case 1) to be distinctive for the reason that invariably overheated 
wires will ignite some foreign substance, such as wood joist, or cleat, which 
in turn ignites the melted through insulation — not pei- contra. The danger 
presented is apparent. 

If the wires are encased in wireways, the hazards presented in Cases 1 
to 5 and as summarized in Classes 1 and 2, are at once obviated. Experi- 
ments made before various underwriters' organizations and elsewhere, 
have led to the acceptance of the fact that conduit will safely confine two 
overheated wires, which obviates the danger presented in Class 1. The 
occurrence of fires from the cause summarized in Class 2, namely, the igni- 
tion of foreign inflammable material (1) from the flame of burning insulation 
and V 2) from the flame of an arc, is fully obviated in the facts (1) that com- 
bustion (oxidization) cannot exist in a closed tube, and (2) that an arc will 
burn away the insulation, bringing bare wires into short circuit and throw- 
ing the current off the wires through the blowing of the fuse. 

The use of two wires in a single tube, therefore, averts the hazards 
enumerated in Cases 1 to 5 inclusive, which are well established and posi- 
tive, and presents only the doubtful danger cited in Case 6, which is theo- 
retical. Again, the use of twin wire lessen the hazard from grounding by 
localizing grounds, owing to the proximity of wires of opposite polarity in a 
single tube. Furthermore, the carrying out of Rule 22E in its present form 
increases the cost of conduit installation by from 25 to 75 per cent. , varying 
with the character and size of the building. 

The Electric Committee has heartily endorsed and recommended the 
general use of wireways for rendering concealed wiring permanently access- 
ible because of the extraordinary and perfect facilities afforded therein for 
universally effecting safe electric wiring. Consistency therewith cannot be 
attained through the enaction of unnecessary restrictions which vastly 
enhance the cost of wireway construction and prove effectual in retarding 
its introduction and general use. 

Your permanent committee on Low Potential Inside Wiring, Concealed 
and in Wireways, therefore, recommends the modification of Rule 22E so as 
to read as follows : 

22. Interior Conduits. 

E. Must not be supplied with twin conductors, or two separate con- 


(luctoi's, in a single tube, except in ultimate circuits carrying current not in 
excess of live amperes. 

Respectfully submitted, 


President Ives — I think Mr. Low is entitled to a great deal of 
credit for the instruction he has given us. The next paper is on "A 
Special Contract, " by "Anon. " As he is not here, Mr. H. M. Grant 
has kindly consented to read his paper. 

Mr. Carpenter — Are we to listen to any paper not written by an 
insurance man? 

President Ives — No, the chair ought perhaps to explain that the 
writer is an insurance man, rather inexperienced — he is certainly an 
insurance man, and we hope an underwriter. 

Mr. Dornin — When I was a lad, I used to read a great many 
papers written by Mr. Anonymous; I consider him a man of great 

President Ives — I think when you have heard the paper that you 
will say that it is all right. 

Mr. Grant — The writer has chosen to keep his identity unknown, 
but I don't agree with the president that he is an "inexperienced '' 
man. It looks to me as though he was very competent to handle the 
subject, and it is a pity that he has not put his name to it. 



Special contracts can seldom be looked upon with favor. As a rule they 
are apt to cover interests substantially different from the usual run, and 
consequently carry with them obnoxious features. The most objectionable 
form of this special contract is the insurance on mortgagee interests, and 
while it is true that no company in this enlightened age will issue a policy 
directly to the mortgagee on his interest as such, we all do so in effect by 
attaching the subrogation clause to our policies. This paper is not intended, 
nor presumed to present, a new idea ; quite to the contrary, it is almost a 
chestnut; but the question is so important, involving so many fine points, 
that having observed that no elaborate paper was to be written on this 
subject, determined to ask the President to accept this as a meager contri- 
bution to the present proceedings. 


I find that in the last two or three years the question has been serlousiy 
agitated on this Coast ; that excellent suggestions from time to time have 
been put forth, but that very little action is taken, and especially through 
the Association of the Underwriters. The object of this is to clearly bring 
the subject before this Association and thus make it a subject for discus- 
sion — one that clearly comes within the purview of this body. 

The first question in Controversy is the right of the mortgagee to demand 
any special contract in his favor ; and the adjustment of this question is 
attended by a consideration of some very good points. Chief among these 
is the right of any man or corporate body to protect his or its interests ; and 
second, the right of an insurance company to insist upon an equal division of 
rights and liabilities. Let us consider these. 


The mortgage company contends that it loans money on values that are 
created by conditions and circumstances ; that such values are estimated 
through the agency of a representative, and who is as likely to be mistaken 
as not. Again, that such loan is not altogether based upon the value of the 
land, but includes the value of the improvements, consequently his loan 
being above the value of the land, he necessarily seeks additional protection 
in a policy of insurance that will reinstate his collaterals in the event of a 
fire. This being the case, he is not willing to concede the right of an insur- 
ance company to cancel its policy, because when he effects this loan he does 
not care to be constantly annoyed by replacing the insurance from time to 
time, if the company should wish to cancel. Hence his desire to omit such a 
right and trust to luck in forcing a company to continue the insurance, upon 
the theory that the clause omitting this right cannot be invoked by the 
company. This proposition, however, can be set at rest by the very excel- 
lent opinion of the Court of Appeals of New York wherein it was held in 
"International Life Insurance Company vs. Franklin Fire ' ' that notwith- 
standing the omission in the clause of this right, the policy condition would 
prevail, and in the absence of a declaration to the contrary, the company 
could cancel. 


The loan company contends that when it takes a policy of insurance for a 
stipulated amount from company "A 1 ' as a collateral for a loan, it is unfair 
to force that policy into contribution with other policies existent upon the 
same property. That is to say, the mortgagee takes this policy for a given 
amount to protect its own loan of $1,000; and that if, in the event of a loss of 
$1,000, five companies having policies for similar amounts should contribute 
to this loss, the policy for this mortgagee would only pay $200. Its interests, 
therefore, are not subserved in the mortgage insurance. Hence the absence 
of the contribution clause from these forms. On the other hand, if there be 
no clause of this character, the company might as well have executed its 
policy direct to the mortgagee. It carries a greater burden than is equita- 


ble and there is no reason why the said mortgagee should not have its con- 
tract restricted by the presence of such contribution clause. 

To further protect itself against the annoyance consequent upon the 
change of mortgage interests they insert the word "assigns." which 
enables these mortgages to be transferred as many times as may be neces- 
sary and without notice to the company. On the other hand, suppose that 
this mortgage should come into the possession of a man notoriously immoral 
and whom the companies all looked upon with distrust, is it fair, by the use 
of such a word, that the insurance interests shall be prejudiced because of 
their failure to know of such hazard, and consequently cancels Further 
than that, if facts should come to the knowledge of the company showing 
cancellation absolutely imperative, it is necessary to make investigation as 
to who the present mortgagee or beneficiary is, and the obtaining of such 
knowledge may take even more time than the remainder of term for which 
the policy was written, consequently during that time the company may 
ha\ e inherited its loss. 


A large number of these mortgage forms contain a provision that the loss 
shall be payable to the mortgagee "as his interest may appear." While, 
without the support of any adjudicated case on this point, the language in 
itself is sufficiently suggestive, yet companies continually ignore it and 
permit policy after policy to be so endorsed. The word "interest" is com- 
prehensive. As underwriters you know when you so endorse a poliicy. 
that you refer to the mortgage interests, but the court in passing upon a 
controversy of this character is compelled to take the language, the possi- 
ble intent of such endorsement and the sequent relation that the payee 
holds the contract. He may have changed his "interest" from that of 
mortgagee to owner, and from that again to payee as vendor under a con- 
tract for sale, and notwithstanding the explicit conditions of a policy 
regarding change of ownership, the language is ambiguous, the intent is not 
clearly defined and the court may consider that the contract was for the 
interests of himself, and that as such would pass to whatever "interests" 
he had in the property. Therefore, the policy as to him would be valid fol- 
lowing such successive interests. In fact, this doctrine has been substan- 
tially maintained in the supreme court of New York, and whether it be 
tenable or not, it is of such doubtful meaning as to be very well avoided. 

I learned recently that some one here has discovered a clause wherein 
the mortgage company attempted to restrict the contribution of its policy 
with that "of valid insurance" only, and that it is the purpose of these 
loaning corporations to arrange the clause so as to appear generally an 
accepted form, but by the insertion of some little word of this character to 
completely change the complexion of the contract. It will also be noticeable 
that if these printed clauses are not scrutinized carefully they will contain 
language even in the subrogation clause that is so constructed as to make 
its value as such very questionable: that an insurance company would pos- 


sibly find that the expense and bother of such subrogation and acquirement 
of rights would not be warranted. 


Now, if we attempt to argue in extenso against the arguments of mort- 
gage companies, we find the subject prolific of controversy and almost 
endless discussion. But there is apparently one feature worthy of consider- 
ation, and that is that the insurance company, by the very nature of the 
risks assumed and the contingent character of its liability, has a prior right. 
The loaning company is in possession of facts sufficient to guard against a 
lo?n that would prove disastrous, both by proper investigation and discretion 
in its line of margin, but the insurer can only use that protection which is 
afforded by his judgment of the risk in its physical hazard. He then plays 
the game of chance. 

On this basis, receiving but a small amount for the liability assumed, 
the company should have greater safeguards surrounding the contract that 
it makes. When it is found in the experience of the business that none of 
the essential conditions of a policy can be waived with safety, the companies 
should unite in a strenuous effort to arrest this tendency to surrender all 
that they have. It would occur to me that it would be easy to establish a 
form that would be alike fair to the mortgagee and the company, and I sin- 
cerely trust that if this paper serve no greater purpose in arrousing con- 
sideration of this subject, it will at least result in the appointment of a 
committee that will take ample time to review this entire subject and 
present to the managers of the companies a form for adoption. 

Many of the loaning companies are over arrogant in their demands, and 
it is in this attitude that the underwriters mav find trouble lurking. 

There are many interesting cases to be recited under the operation of 
this ex parte clause and I will not take up your time by their recitation, but 
one comes to my knowledge which will be of interest and serve to illustrate 
that under the apparent glittering promises of a mortgagee under this 
clause, the companies carry a hazard that they had not considered and that 
in reality no premium can pay for. 

The company in question insured the building of a man in Washington. 
After securing the insurance he mortgaged the property for all that it 
would stand. The usual mortgage and subrogation clause was attached to 
the policy. The assured effects large life insurance and then deliberately 
plans his campaign. Securing the body of a recently deceased person, he 
places it in his house and at midnight causes the building to be burned, 
immediately making his escape from the country. The wife at the time of 
the fire was away, and the next morning the neighbors discovered the 
property burned and the partly incinerated corpse. The presumption, of 
course, was that he had been burned in his own dwelling. The wife made 
claim for the life insurance, which, however, was not paid, because the plot 


was proven against him; but the fire company was compelled under its 
clause to pay the loan company the amount of the mortgage, and, of course. 
became subrogated to the rights of the mortgagee. 

Here is a case illustrating deliberate fraud and arson, yet under that 
language of the "special contract," "any act" of the owner the fire com- 
pany was compelled to pay. There many other cases of equal interest, but 
permit this to suffice. I would state that in my opinion a vast number of 
the forms now in use are absolutely dangerous, and that if policy and 
endorsement clerks are not in the habit of reading each clause separately. 
such instructions should be given at once. The exigencies of the question 
require it and every manager will find that in such careful scrutiny the 
time will be well expended. 


( Applause. ) 

Mr. Carpenter — I suggest that the writer of this paper be ap- 
pointed chairman of that committee. 

Mr. De Veuve — Mr. President, this matter of mortgage clause was 
embodied in your annual address this morning, and I believe it is a 
very important subject, also the contribution clause. I think this 
committee you appointed would do well to recommend to the Pacific 
Union adoption of the New York standard. I don't believe we could 
in this Association, afford to say that we are going to regulate the 
business of the loan companies, or that the loan companies are going 
to regulate our business, but I believe it is possible for us to get the 
thing in proper shape, and place it before the Pacific Insurance 
Union, and ask them to adopt some standard or other of mortgage 
clause, and that it would benefit us and in fact the Association at 

Mr. Carpenter — There is one thing I think will be of practical 
benefit, and might be done. Take the Mutual Life Insurance Com- 
pany of New York: they are large loaners of money. I think we 
could procure samples of the forms which are used by those com- 
panies, large money loaning companies, and formulate some ideas 
from them. 

Mr. Osborn — Some three or four years ago, I became quite inter- 
ested in this subject of mortgage clause and had some correspondence 
with eastern underwriters. One gentleman in particular who was an 
officer of a very prominent American company, intimated in his cor- 


respondence, that it was a piece of presumption for anyone on the 
Pacific Coast to think for a moment that he could handle a ques- 
tion which New York and Chicago were totally incompetent to cope 
with. In reading over the journals, I think some three months ago. 
I observed that the Chicago Board of Underwriters had made it 
absolutely obligatory for all companies of that body to use a certain 
form. They have made it mandatory to the extent that they will 
not approve any policy that does not contain it. I believe it is sub- 
stantially the form of the New York standard, with the exception of 
the language "as his interest may appear." 

Mr. Dornin — I want to reply to what my friend says. The evil 
has grown rapidly within the last few years. The agents in the 
country are also agents for the loan associations. They get a com- 
mission from the loan companies, and also a commission from the 
insurance companies. In my own experience, I have for the past 
year positively prohibited and refused to approve any of the patent 
forms, and have been successful. In a great many instances the 
loans are for small sums, and are on property more or less remote 
from the agencies. Agents desirous of affecting loans will often fix 
the values themselves, as well as negotiate the loan, and affect the 
insurance. So I think from every point of view, the reports of poli- 
cies issued on property mortgaged to these loan associations, should 
receive the most critical inspection by the examiner. Some two or 
three years ago, I remember a committee was appointed for this very 
purpose — of recommending the nature of contract for these loan asso- 
ciations, savings banks, &c. I am not aware that any report was ever 
made. I think the conclusion reached was, so far as our home banks 
were concerned, there was no difficulty in the way. We have very 
few loan associations in California. They come from the far East. 
Their territory has been largely in the middle West, which they have 
covered with mortgages very completely, particularly in Oregon and 
Washington. But to come back to the original proposition, I think 
that we can, by a little care and courage as individuals, set up a law 
that we will have no other forms than we furnish our agents. I think 
we will be able to make it stick. 

Mr. De Veuve — I am glad that Mr. Dornin has been so successful 


with his agents, but none other of my associates seem to have had 
the courage to do the same. I believe the only difference in the 
clauses is that some clauses, as Mr. Ives said this morning, contain 
a wording regarding other insurance, whether valid or not, or invalid 
or not. The word invalid is omitted; then again the matter of "as 
interest may appear, " which I believe is a very proper form. It 
would be impossible for the companies to set aside their interests. 
The New York standard form is a very proper form and all under- 
writers are aware of it. 

Mr. Dornin — I think if the general agents and managers of the 
companies would recognize that the policy conditions furnished by 
their companies are prepared by the companies and that they have 
no right under their contract with their companies to interfere there- 
with, it would be much better. In my correspondence I have taken 
that point of view r , that I have no right to suspend any of the cardi- 
nal principles nor will I permit it to be done. 

Mr. Wetzlar — I didn't have the pleasure of hearing this morning's 
discussion regarding the Mortgage Clause, but I listened very atten- 
tively to all the papers and discussion this afternoon, and I find that 
the common drift of opinion seems to be in favor of the present 
clause of mortgage as now attached to the policies of the different 
companies, and I find that the remedies suggested in that paper in 
rather a crude way. The gentlemen seem to have hesitancy in ex- 
pressing themselves as regards a remedy for the evil. I think that 
by a joint action of the insurance companies, if lived up to honestly 
by the different members of the Union, we could entirely remodel 
all this field. I am heartily in favor of and would suggest that this 
organization appoint some committee to dip into the subject, to look 
into it cautiously and studiously, and in some way, shape or form 
present to the Pacific Insurance Union the subject in a manner 
whereby that body can see from the various forms in use, what they 
should do. 

Mr. Ives — Mr. Wetzlar, the committee was appointed this morn- 
ing to consider a paper read by the Chairman which embodied the 
suggestion you have mentioned and I presume will report to us some- 


time during to-morrow, probably in time for our business meeting in 
the afternoon. Possibly after their report is received some other 
committee may be in order to take up the Mortgage Clause. 

Mr. Wetzlar — I ask the indulgence of the Chair. I was not pres- 
ent when the President read his report. 

Mr. De Veuve — Who was that committee? 

President Ives — Mr. Lowden. Mr. Smalley and Mr. Sexton. 

Mr. Dornin — I move we adjourn. 

Mr. Grant — It seems to me to be well enough to refer the sug- 
gestions contained in this paper of Mr. Anon to the same committee 
that takes into consideration the President's address upon the same 
subject — the Mortgage Clause — and make a motion to that effect. 

President Ives — I would suggest that the committee would prob- 
ably make a very brief report. I don't think they have time, they 
have so much to do. I think the committee has been appointed 
more to put the matters in form for discussion at the business meet- 
ing to-morrow, and whether they would care to assume any further 
responsibility in the cas3 of the mortgage form is somewhat doubt- 

Mr. Grant — I am quite willing to withdraw my motion if in your 
judgment it would be better to appoint a special committee. 

Mr. Lowden — I don't see that it is necessary to have another 
committee. We may have some suggestion to make on it and have 
the Mortgage Clause as a basis. 

Secretary Osborn — At the last annual meeting we passed some 
amendments that have been in trouble ever since, and I believe it 
will be best to bring them up at this meeting rather than to have a 
repetition of this thing. I would suggest that members in this room 
make an effort to get proxies from those who will not be present, and 
come prepared to settle this controversey. 

President Ives — I might add further to what the Secretary has 
stated: it seems that a two-thirds vote of all the members is re- 
quired, either personally or by proxy. We have struggled for a 


year to get two-thirds, either by person or by proxy, and up to the 
present have been unable to do so. and I hope you will follow Mr. 
Osborn's suggestion. 

On motion of Mr. Wetzlar the meeting adjourned to February 
21, 1894. at IO A. M. 


Wednesday. Feb. 21. 1894. 

10 A. M. 

President Ives took the chair and remarked that "from the light 
attendance this morning it looks as though the majority of the 
members did not understand the time of meeting. The first thing 
this morning is a paper by Mr. Weinmann on the ' The demands of 
the Times.' " 

Mr. Weinmann reads. 


As we review with dread the appalling fire waste of 1893, combined with 
an alarming shrinkage in securities, and in many instances an unusual 
decrease in surplus, it does not require a very discerning mind to perceive 
that the emergencies of the times demand that more thought be given to 
the science of underwriting. Active competition, the desire on the part of 
the home offices to have sole representation, the greed for business by fair 
means or otherwise, often to the total exclusion of honor, the vital part of 
our profession and the foundation on which it stands, the disregard and 
ignorance of the elemental doctrines of insurance and the many fallacies 
that have broken into our ranks, the abuse of which challenge the attention 
of all, are the direct causes for the present condition of affairs. 

Admitting that in some instances expediencies may be invoked for ulti- 
mate good, their continued use is not only flagrant violation of rules, 
customs and principles of underwriting, but is also detrimental to all who 
use them. Valuable and indispensable as fire insurance has become to the 
civilized world, and surprising as regards its growth and success, yet unless 


the warnings of the times are heeded, disaster and failure will be of com- 
mon occurrence. 


The great and seemingly extravagant expense of conducting our busi- 
ness and the excessive and increasing loss ratio should attract the minds 
of those who have the management and a unity of action secured. There 
has been a time when the influence of an individual company was acknowl- 
edged, but now the insurance business has grown to such vast proportions 
that individuality is lost sight of. This altered condition which confronts 
us involves a radical change in the methods which we should pursue. The 
time is ripe in extending the scope of combined organization, in studying the 
question of a wiser economy in expenditure and a reduction of fire waste. 

If we will not adopt some feasible plan for our mutual protection, but con- 
tinue to act as in the past, our burdens will be increased, for besides the 
evils we now have, public opinion will cause unjust legislative enactments, 
resulting only in our injury. An earnest effort should be made to unite in 
the organization all companies under the jurisdiction of the Pacific Insurance 
Union, and then, acting with a unity of purpose, seek to strengthen each 
other by working along the same line of support. Before a perfect organ- 
ization can be accomplished, the management of the various companies 
should give positive evidence of broader good faith and higher integrity, 
coupled with a determination to pursue that course which insures the 
most complete harmony of plan and action. 


When you stop to consider the tendency of the day in changing our pro- 
fession from a science to a mere barter and trade proposition, I hope you will 
concur with me in the justification of these remarks. Unless the organiza- 
tion can be affected as a remedial agent and applied to correct the thought- 
less methods used in obtaining business, matters will grow from worse to 
worse, provoking a war of extermination among companies and resulting in 
the survival of the fittest. I say thoughtless methods, as no one will at- 
tempt to deny the fact that selfishness and greed for premium income 
have become so fearfully predominant that the mind of the average under- 
writer has been concentrated in securing a large number of risks, almost to 
the total exclusion of quality or desirability and utter disregard of insur- 
ance rules and etiquette. To gain this end policies have been liberalized to 
such an extent by removal of portions of the written contract, or by con- 
cessions made by endorsements or riders that many safeguards have been 
broken down, thus encouraging incendiarism and paving the way for the 
assured to make unjust claims. 

Every deviation from the principles of underwriting adds to the expense, 
and therefore decreases the profits, which are the support of the business. 


That which is of primary importance, the rock upon which we stand, is 
honor, truth and fair dealing. Without these as a foundation our efforts 


will be naught. Granting that all agree as to this statement, we proceed. 
The classification of risks should be an important factor for careful thought. 
for if conscientiously carried out, adequate rates will be established and 
loss ratios reduced. A uniform method of classification should be adopted, 
thus enabling each company to profit by the experience of all. A standard 
form of policy would place all on an equality and simplify matters in 
adjustment of losses. If not attached to all policies, the three-quarter 
clause should be made a part of every policy, permitting other concurrent 

The mortgage clause, in fact all clauses, attached to our policies should 
be written so that we make no waiver of the printed part of our contract with 
the assured. All just claims should be paid, notwithstanding that a company 
could resist settlement on technical grounds. The refusal to consider such 
claims, although temporarily beneficial, ultimately causes attacks by news- 
papers, distrust of the general public and adverse legislation. It is to be 
regretted that the special agent, on whom the success of the company he 
represents depends largely, has been turned aside from his true vocation 
and has become no more than a salaried solicitor. This has been brought 
about through ignorance of the requirements of the special and a miscon- 
ception of the methods to be followed in securing risks. 


The times demand that the special be better fitted for his duties. 
Counsel him to study the profession he represents. Impart to him all the 
instruction in your power as to how adjustments are made, and refer him to 
books and capable authorities for further information, especially as to legal 
decisions, also defects in the construction of buildings. Numerous fires are 
caused by defective flues and electric wiring so common at the present day. 
especially in houses built by contract or on the installment plan. 

All risks should be carefully inspected, but when not practicable, a rigid 
examination of the application or daily report, its physical hazard, its points 
of danger, the adjustment of insurance to value, and the financial standing 
of the assured is necessary. 

Without suggesting further, let us brush away the discord that has long- 
caused waning in our ranks and unite in one common cause. 

United we are powerful enough to command the respect and confidence 
of the business world. Let there be honorable co-operation, suffering 
neither selfish prejudices nor aggrandizing purposes to swerve us from 
measures for our common good. 

The world has always recognized the value of a character in which faith- 
fulness to duty is predominant. Carrying with us a true love of our 
profession, with integrity as the polar star of our existence, we may be 
safely guided to honor and success. 


(Applause. ) 

President Ives— Has any member got any plan to offer to obviate 


the difficulties Mr. Weinmann has set forth, or any one of them: 
we would be glad to hear from him. 

Mr. Gunnison — I would suggest that the paper would be very use- 
ful to be read before the managers of the companies and would do a 
great deal of good. 

President Ives — It will be published. 

Mr. Gunnison — I fear they don't look at the report. 

Mr. Watt — 1 don't want to start so early in the day to talk on 
every subject that comes up. but I would like to ask a question: 
From your long and extensive experience, answer how can two general 
agents of about the same age and experience and about the same 
standing in the business community, pursue diametrically opposite 
courses — one grasping for large premiums, writing liberally and 
freely, large lines on practically everything that is offered, and the 
other writing small and conservative lines and only in certain pro- 
tected towns — and both make money ? Whose example is the young 
underwriter to follow ? 

Mr. Frank — Try both sides. 

Mr. Watt — Well, they both make money. 

Mr. Andre — That is very much like the homcepathic doctor. 

Mr. Swett — I think Mr. Watt's suggestion is worthy of consider- 
ation. I have studied those points quite thoroughly and he has it 
when he says both make money. One was conservative and sure 
and the other by writing so extensively got his general average by 
carrying so many, struck the average. The middle course is the 
uncertain one. 

Mr. Sexton — It is easy to ask questions and discuss theories. 
The suggestion of a three-quarter value clause to be put in every 
policy is a practical matter because one of the courses of the busi- 
ness now is that a man who has a dollar's worth of property can get 
$10,000 worth of insurance, as the adjuster finds when he gets around 
to settle the loss. The special agents ought to be something more 
than solicitors — ought to be educated to something else. A special 
agent can examine risks, pass on them, value the property and re- 


port to his office. That this man has $10,000 on his property and it 
Is a good risk and that this one is a poor risk, and after the report 
has gone in, that man will go out and get $6,000 more insurance, get 
$12,000 on a $10,000 stock; then it is certain it would he a had risk. 
there would be no question about it at all. This is the reason that 
two specials visiting the same field in speaking of a risk at different 
times would make different reports. Ten or fifteen years ago, when 
companies would only write policies when the total insurance was 
stated and when only seventy-five or eighty per cent, was permitted, 
it was very different. Now has the Pacific Insurance Union in its 
wisdom grown silent on these points and allows everybody to take 
as much iDSurance as they want, regardless of the Three-quarter 
Clause. And I am in hopes the meeting will report favorably on the 
Three-quarter Clause. 

Mr. Weinmann — Mr. President, while Mr. Sexton's remarks are 
correct, his ideas of special agents at the present day do not 
meet with my approval, because I think beside physical hazard 
there is moral hazard. A special in visiting a town looks over the 
risks and makes a report on the building and surrounding expos- 
ures, and also sends in report on the moral hazard of the assured, 
and the reason I suggest the three-quarter clause to be attached to 
all policies, is so as to offset the moral hazard. 

President Ives — Are there any further remarks on these ques- 
tions? If not we will proceed to the next paper. Last year when 
Mr. Carpenter gave us a song at a banquet in regard to the Modest 
Mannered Maiden. I do not know but many of us thought that was 
about the strongest case of modesty in this business that has ever 
been known. There are a couple of young gentlemen, however, who 
at the request of the Chair tried to help us out — Mr. Fuller and Mr. 
Fabj — by their joint efforts have produced a paper which we shall be 
glad to have presented to the Association. Mr. Fuller, after stren- 
uous urging, has at last decided to read it. 

Mr. Fuller — I have no particular excuse to offer for this paper, 
as I believe it is a subject worthy of your consideration. I must say. 
however, that the paper was prepared hurriedly by Mr. Fabj and 


myself while on the train enroute from Portland, Or. It consists 
only of a few facts thrown together intended as suggestions and was 
made intentionally brief. 



To the President and Members of the Association of Fire Underwriters of the 

Pacific Coast : 
Gentlemen : — 

The alarming increase of fraudulent claims in the Pacific Coast field dur- 
ing the past few years, and more particularly the year 1893, we believe 
warrants the suggestion to this Association that some means be devised for 
the detection and suppression of incendiary vice, to which fire insurance 
interests are in a great measure subservient. 

While this is undoubtedly a problem most difficult to solve, we believe 
there is a way possible whereby more satisfactory results may be attained, 
tending to the diminution of fire losses from incendiary origin. 

The suggestion which we desire to present for your consideration is the 
establishing of what may be properly termed a "Bureau of Investigation," 
which should consist of a competent and throughly reliable chief officer, 
aided by two or more efficient associates, whose duty it should be to devote 
their entire time to the investigation of incendiary fires and defeating 
fraudulent claims. 

This "bureau" could be under the control of the "arson committee," or* 
a committee selected especially for the purpose. We believe the expense of 
maintaining such a bureau would not necessarily be large. 

From our observation of recent fraudulent claims investigated independ- 
ently by some of the offices, whereby thousands of dollars were saved to 
them, we believe the benefits of a "Bureau of Investigation," working in 
the combined interest of all the companies, would undoubtedly produce bet- 
ter results proportionately, not only in a direct saving of dollars and cents, 
but the benefits that would be derived from the moral effect, by preventing 
fraud, appear to us as being inestimable. 

R. P. FABJ, 


(Applause. ) 

President Ives— There is no question, gentlemen, but what it is a 
valuable suggestion and would benefit generally, the Association. 

Mr. Grant — I would say simply, it would seem to be a matter of 
expense, however, that would need to be pretty seriously considered, 


mostly because companies generally depend upon themselves in 
ferreting out fraudulent losses. 

Mr. Swett — I think this suggestion might be a good one. and move 
that the executive committee be empowered to go for the executive 
committee of the Pacific Insurance Union and bring them in here 
and compel them to listen to this report. 

Mr. Sexton — I hope this needs no second: it is certainly no pun- 
ishment to be brought in here to listen. 

Mr. Puller — I would like to hear from Mr. Fabj on this question. 

Mr. Fabj — Mr. Fuller has expressed my sentiments very fully in 
the paper. 

Mr. Andre — Mr. President, I think it is an excellent idea. In the 
State of Nevada where I started in to learn something of insurance, 
they have an excellent law which is known as, I think, the ;t Fire 
Inquest Law. ' ' After a fire any citizen can go before a Justice of 
the Peace and demand an investigation as to the cause of the fire. 
Some years ago I was up there. A man had rented a blacksmith 
shop at least there was a dispute about the title, and it took fire. 
His neighbor demanded an investigation, and the result of the investi- 
gation was that the man was put in jail. He got out on bail and was 
lost sight of for several days, and was finally found lying dead in 
the building which was only partially destroyed. He shot himself. 
I think the moral effect of the law is good. Where an adjuster will 
come and settle his loss, perhaps in a day or two — two or three days — 
the adjuster has not the time even if he has the ability, to investi- 
gate the matter thoroughly, if the assured knows that there is a 
probability of a thorough investigation, the moral effect is good. If 
an adjuster finds a loss is suspicious, he starts to investigate, it might 
take, perhaps, ten or fifteen days to find out all the facts. And if 
he would undertake to do so on his own responsibility, it would be 
all right if he succeeded, but if he failed — "Well, we don't want Mr. 
Andre or Swett any more, we can get good men to do that adjust- 
ing in a good deal less time.'* Therefore, I think that is a good 


Mr. Gunnison — I do not wish to be considered as taking up too 
much of your time but I will say that I have given that case a good 
deal of thought for several years, have tried to formulate some plan 
and have expressed my ideas to some leading insurance men and 
have met with a great deal of encouragement. In regard to that 
law in Nevada I have spoken of it within the last few days. Before 
it was passed, fires were a frequent thing in and about Virginia City 
and other places in Nevada, and adjusters found suspicions were very 
strong and you know it generally stops there, at suspicion, and the 
loss is paid. Now, a few years after this law was passed, I was up 
there to adjust a loss and one of the citizens said he believed that 
this law had stopped incendiarism almost entirely. They found that 
property that had depreciated in value would be over-insured for 
more than its value. They would set it afire and get from the in- 
surance company twice or three times as much as anybody else would 
have given them and they found out that after this law was passed 
and inquests were held in regard to fires, that almost invariably the 
question arose as to the value of that property, and it came out very 
frequently that it had been offered for sale for half what the insur- 
ance companies would insure it for. It would arouse suspicion and 
they would call in this neighbor and the other neighbor and find out 
that it had been set afire and they had become scared and this pre- 
vented fires to a great extent. Now, there is another question in 
regard to that matter of an investigating bureau or examining on 
whom the onus can be placed and whether it is incendiary or not. 
You relieve the insurance company of the responsibility — the bureau 
shoulders it. 

Mr. Fuller — Mr. Fabj and I would like an expression from the 
members if it is not advisable to establish an independent bureau, 
then I would strongly urge that the companies individually prose- 
cute those cases more than they have been doing in the past. Mem- 
bers who have handled losses, know very well that a great many of 
the cases are fraudulent. I have seen the necessity of being com- 
petent to ferret out those things, and in my failure to do so, have 
had to take proofs and pay the loss. Whereas I knew very well that 


a competent man in the investigation of that claim could probably 
prevent the payment of same. 

, Mr. Sexton — There is no question about the necessity of some- 
thing like this. Mr. Gunnison and I talked it over on the quarter 
deck of a stage coach, thirty or forty years ago, and it has not 
reached a method yet. It is the old story of who would "bell the 
cat" and it stops right there. So I am not certain that each man 
will not have to do his own fighting and his own running as usual. 

President Ives — If there is nothing further to be said with reference 
to the establishment of a bureau for the investigation of losses, we 
will call for the next paper in order, which is: ''Use and Abuse of 
Compacts," by our talented friend E. W. Carpenter. 



Use : Profit through legitimate competition. 
Abuse : Profit through competitive deception. 

It is really unnecessary to elaborate upon the foregoing definitions, 
and my comments will be very brief. I know there are those who lay 
great stress upon the benefit of insurance Compacts to property owners. 
While it is true that, by enabling companies to keep solvent and by encour- 
aging, through discriminating ratings, superior building construction, etc, , 
they are of said benefit ; nevertheless, they are primarily created for the 
purpose of profit to their members. 

"To do good and make money ' ' might be a proper motto for them, if you 
upset it and put the "do good" in small type. I speak pointedly purposely 
because there seem to be so many who are disposed to refer to a Compact 
organization apologetically, and as if it needed to go before the public dis- 
guised in a mantle of benevolence. 


What other business acts as if it were ashamed of the combinations 
made in the interests of its members? The doctors who help you into 
and out of the world carry their combinations to an inhuman degree ; the 
druggists have their tariff rate for porous plasters, purgatives and pukes, 
and the undertaker will bury you under "Compact" conditions that may 
be oppressive but you don't know it. The nations of the earth, notably 
those of Europe, group themselves into what may be called Compact dis- 
tricts from purely selfish motives ; the workingmen that work and those 
that don't, unite to maintain wages; and even in the order of the universe 


there seems to be an understanding between the spheres that each shall 
keep its place, and that "competition, the life of trade," shall not cause 
the Dog Star to tackle the Heavenly Twins, nor the Big Bear to swallow 
the Virgin. 


The necessity for the formation of Compacts is greater in the insurance 
business than in any other, because of the width of the danger zone which 
lies between success and failure. In the case of manufactured goods, for 
instance, the cost of production and marketing can be determined with 
considerable accuracy, and the "dead line" between profit and loss 
reasonably well denned; but, in the case of insurance, we sell the goods 
before we know what they are going to cost us, and the price charged 
must be arbitrarily fixed. Experience is of assistance to us in this con- 
nection, and if the experience of many companies can be utilized, as is 
measurably done, through the medium of the rating committees and survey- 
ors in the case of Compact organizations, we are more likely to obtain 
adequate rates. 


If, besides aiming at what is likely to be an adequate rate, we, through 
the Compact, make this rate mandatory, we have, as nearly as possible, 
fixed a value for our goods by artificial means, with a degree of accuracy 
approximating that which natural means (cost of production, etc.,) fix for 
manufactured articles. 

When God created the earth He established certain laws and conditions 
which labor-saving contrivances may utilize but never circumvent, and 
which determine for the Connecticut Yankee, in advance, the cost of manu-- 
facturing clothes pins. Our New England friend can, with mathematical 
serenity, build up the cost of a clothes pin from the forest to the laundry, 
while we insurance men construct an airy castle in which incomplete 
experiences serve for foundation, and hopes, and guesses, bound together 
by Compact regulations, for the superstructure, and base our selling price 


Bearing in mind the distinction above touched upon, might it not be 
admitted that combinations between the producers of mateterial things 
might be "unholy," while underwriting combinations might be entirely 
proper 3 

Charity finds but slight lodgment in the insurance, or any other busi- 
ness. When the Spring Valley Water Company lays its mains in the 
streets of San Francisco, it finds no incentive in the text which refers to 
spiritual rewards to accrue from the giving of "a cup of cold water; " and 
when the legislator is biennially sent by some "unholy" political com- 
bination to Sacramento, he draws as much pay as he can and as long as he 
can, and has lead pencils to loan for ten years thereafter. 


Insurance companies are organized for the express purpose of obtaining 
from their patrons more than they have to return to them, and the prime 
use of the compact is to enable them to do this through legitimate com- 


Now as to the abuse: Well, what's the use of talking? If you are not 
familiar with the forms of competitive deception adopted, in connection 
therewith, I do not wish to post you. I will refer briefly, however, to the 
result of this abuse upon the underwriter himself. He becomes a member 
of a compact organization upon the assumption that the regulations 
mean exactly what they say, and are to be strictly adhered to by all mem- 
bers. He does not resort to the subterfuge of calling a solicitor a collector 
in order that he may pay him a salary in violation of the rules ; he does not 
put his agency in the hands of a provisional syndicate of property owners 
and thereby practically give rebate to the assured ; he does not get around 
the rules by a resort to those methods which are as much more dishonorable 
than a direct violation, as they are more cumbersome. Presently agents, 
solicitors, brokers and property owners commence intimating that they 


With faith unshaken in the honesty of his business brethren, and with 
the mental comment that interested parties are trying to "play one com- 
pany against another," he stoutly maintains that all rules are to be strictly 
enforced, and refuses to make the least deviation. His business begins to 
shrink. Why? It is not because of the standing of his company. — one of 
the best in the land ; it is not because of hard times (we are' speaking of 
ordinary years) , inasmuch as other offices are showing an increase : it is 
not for lack of effort. Can it be by reason of personal unpopularity \ " Now 
you're talking," says his neighbor. And suddenly the underwriter under 
consideration awakes to a realizing sense of the fact that by attempting to 
be governed by a plain interpretation of Compact rules, he has antagonized 
the source of income supply. While his competitors are crawling on their 
bellies and groveling in the dust of deceit, he is standing erect, the 


His astonishment is as great as that of a volunteer soldier during the 
battle of Bull Run. The enemy were about to fire a volley and the men 
were ordered to drop to the ground. One of them did not understand or 
obey the order. The enemy's volley came quickly, and then looking around 
him at the ground covered with men lying on their faces, he exclaimed, 
" Great God ! All dead but me?" The aptness of this illustrative anecdote 
is evident when one remembers that twenty-seven out of a possible fifty in 
a prominent compact organization recently admitted having " fallen 
down," and, a majority of the executive committee having made the same 
admission, it was proposed that the constitution should be so amended as 
to require said committee, at least, to obey its own rules. 


But we are losing sight of our unique underwriter. What can he do but 
accept the situation as he finds it, resort to the same twisting tactics as his 
competitors and enter the lists for competitive deception ! 

Herbert Spencer says: "The system under which we at present live 
fosters dishonesty and lying. * * * 


to such an extent that an assistant who cannot tell a falsehood with a good 
face is blamed; and often it gives the conscientious trader the choice 
between adopting the malpractice of his competitors, or greatly injuring 
his creditors by bankruptcy." If we substitute "manager" and "company" 
for "trader" and "creditors," the foregoing quotation is a fair synopsis 
of the insurance situation under the Compact system, run on the "abusive " 

And so the underwriter who has assumed that his fellow Compact 
members intended to be governed by their mutual pledges, finds it was all 
a mistake ; that he has been "undiplomatic" and "non-elastic" because 
he has not made slight concessions which entailed little faith-fractures 
one day, and greater ones the next. He finds that Noah Webster's defi- 
nitions are not applicable to Compact literature, and because he thought 
they were that 


of attempting to put an odious interpretation upon the rules; he finds 
that the member of the Compact who obeys the rules himself and expect* 
others to do the same, always has a grievance to be considered, and comes 
to be regarded as an enemy of the organization and conniving at its down- 
fall, while the suave hypocrite who makes no complaints and is prepared to 
discount every trick of his competitors is the "good boy; " he finds that 
the abuse of the compact system, the obtaining of profit through competi- 
tive deception, involves either a loss of self-respect or of the business his 
company pays him for securing. Figuratively speaking, (and with apologies 
to Satan for using his name in this connection) he finds himself " between 
the devil and the deep sea." Is it strange that he has a lean ing towards 
the devil? 

It is fortunate for your patience and my ability that your President, in 
nominating my topic, did not indicate that I was to suggest a remedy. 

It is fortunate for your patience and my ability that your President, in 
nominating my topic, did not indicate that I was to suggest a remedy. 


(Applause. ) 

Mr. Carpenter — Mr. President, I claim no experience with refer- 
ence to the latter portion of this paper, and only tell that from 


Mr. Sexton — It is usual to say something after a paper like this. 
but as Mr. Carpenter has said it all there is nothing to say. 

President Ives — The next paper will be "Value of Statistics. " by 
Mr. Ben. J. Smith. 

Mr. Smith — Mr. President and Gentlemen: When our President 
assigned me this duty it seemed to me that any remarks that could 
be made about it would be all prose and I set out to prepare the 
paper, and prepared a paper probably eight or ten sheets. After 
looking it over, it occurred to me to find out what some of the other 
papers were going to be on. I found out that one was classification, 
and going back to mine observed that I had practically written a 
paper on classification, so I put a pencil through the larger part of 
it. What I have here is the remnant, and I am satisfied that you 
will be better pleased with the remnant than the full paper. 

Reads the paper. 


It is to be regretted that a paper upon the value of statistics must of 
necessity be an essay merely. 

I should be glad if it were possible to furnish an array of figures prov- 
ing conclusively that statistics are valuable, and it seems to me that it 
should require little argument to so convince any man. but a little in- 
quiry among the various managers in San Francisco shows that not 
all of them so believe. 

I do not remember that any of the several gentlemen, whom I have 
interviewed, have denied the ^value of statistics in the abstract, but when 
applied to localities, and especially to classes of hazards, they argue that 
the limited amount of premiums received, prevents any one office from 
obtaining the average. Granting that this argument is not wholly without 
force, of how little value is a general idea arrived at without the assistance 
of figures. 

How often have our opinions, as to how has paid a certain agency, town. 
or locality, been entirely changed upon making up a summary of premiums 
and losses. I have recently had an opportunity of seeing, for a certain dis- 
trict, the combined figures of several companies, running over a term of 
years. These figures show a loss ratio of over 140 per cent., and yet the 
business of that district is diligently sought by the majority of companies. 

An example in the other direction. A number of offices recently agitated 
for a substantial increase of rates in one of the towns of the Northwest. 
The general manager of the Union procured the figures showing the 


experience of several prominent offices in the town, the result proving 
the present ratings to be quite adequate to cover losses and expenses. 
The chief agitator found to his surprise that his experience had been excep- 
tionally favorable. 

Statistics should, however, be used with caution. It has been said 
that figures do not lie, but they may be dreadfully deceptive and are fre- 
quently made up for this sole purpose. There are many circumstances 
tending to modify, if not entirely reverse, results shown by figures only. 

There are usually what, for want of a better word, I will term "pitfalls" 
even in the simplest statistical statement, the nature of which are known 
only to the compiler. Any one else should make a most careful use of 
statistics, ascertaining from the compiler any circumstance out of the ordi- 
nary, needing explanation. 

Statistics and general knowledge should always be brought each to the 
assistance of the other. Used together they will be found of great value, 
separated, years of experience and millions of dollars have gone for 


(Applause. ) 

Mr. Watt — Pardon me for speaking- once more. An item men- 
tioned by Mr. Smith in his paper was one of more than usual 
interest and which I am going to emphasize. One member of this 
Union got it into his head that the. rates in a certain prominent 
town in the Northwest needed to be advanced, and brought the sub- 
ject before the executive committee, to advance the rates. As conser- 
vatism sometimes marks its course, the executive committee, before 
acting, made inquiry for themselves on that particular town. It was 
surprised to find that the business as a whole, had been quite profit- 
able, and the man who made the application to have the rates 
increased found, to his great surprise, that he had made consider- 
able money there. His application for an increase of the rate was 
withdrawn. It is therefore a good idea to keep figures in reference 
to each town in which we do business, and have the income from 
these towns and the losses separately tabulated in a book prepared 
for that purpose, and whenever such information is called for, we 
may give it promptly, and be able to arrange rates on this Coast so 
as to make a profit. 

Mr. Swett — Bearing upon that paper of Mr. Fuller's, I wish to 
say the records of my office show that 65 per cent, of the number of 


Losses which 1 have adjusted, occur within the first two and the last 
two months of the life of the policy — certainly very suggestive. 
That is bearing upon the recommendation of Mr. Fuller. 

Mr. Weinmann — Mr. President, in referring to that paper in 
regard to stocks, I think it would be beneficial to all the companies 
on the Coast. If each company would keep a classification of the 
risks it has on its books, we would arrive at the same result as though 
we had a standard for all classification. 

Mr. Carpenter — The objection to that is, that men have different 
ideas in regard to classification, and I don't believe the managers on 
this Coast would be desirous of doing it. 

Mr. Dornin — It may be made to work admirably, Mr. President. 
I had at one period in my official career, two sets of companies: one 
required the English plan of classification and the other the Hart- 
ford plan, and in trying to classify under these two systems, we 
sometimes found ourselves at loss to know ' ; where we are at. ' ' There 
was a classification system devised by my son, a few years ago, and I 
think a paper was read before this Association several years ago by 
him, and was specially adapted to the conditions of this Coast where 
we had a series of tariffs, one, two, three, four, five, adjusted to 
every condition of physical hazard and otherwise for several towns. 
We therefore had going in that office three different sets of classifi- 
cation; theresult was, we did not know what to do half of the time. 

President Ives — The next paper on the list, gentlemen, is Obser- 
vations, by Calvert Meade. As Mr. Meade is not here he sends his 
paper in with the request that I will ask some one to read it. Will 
you read it, Mr. De Vueve? 

Mr. De Veuve reads. 

I trust you gentlemen will bear with me in reading this paper. 
I am a better talker than reader, I think. 


Between two lofty ranges — the Sierra Nevada Mountains on the east, 
with an average altitude of 8,500 feet, and the Coast Range on the west, 
which rises from 4,000 to 6,000 feet above sea level, lie the £reat valleys 


of the Sacramento and San Joaquin. Their general elevation above sea 
level is about 556 feet at Redding on the north, to 30 feet at Sacramento 
in the centre, and 282 feet at Bakersfield on the south. This great 
interior basin aggregates a length of 450 miles, varying in width from 
40 to 70 miles, embracing both tropical heat and almost arctic cold, rang- 
ing from 120 degrees above zero in the valleys, while on the rim of the 
Sierras, forming this immense basin, the mercury falls to 40 degrees below. 
The extremes of heat are nearly as great in these valleys as on the barren 
wastes of the Mojave and Colorado deserts. 

While high temperatures are experienced during the summer days, 
the air is usually quiescent, but at sundown a breeze springs up which 
revivifies the parched atmosphere engendered by the intense heat of the 
sun, and this breeze, combined with the rapid terrestial radiation, reduces 
the temperature so that the nights are comfortable. 


In passing it may be said that the presence of this great valley and its 
climatic conditions, is the cause of the strong winds felt along the coast 
line of upper California. In the summer the great heat of the mornings 
rarifies the air in the valley, and it following the law of Nature, rises. The 
nearest supply of cold air is at the ocean, and as Nature abhors a vacuum 
this cold air rushes in at great speed towards the valley, and passing over 
the coast towns and cities on its way gives us the strong winds of summer 
which we experience at San Francisco. The general trend of this wind is 
northwest, though it changes to due west at San Francisco owing to local 
configuration of the coast line. San Diego, Los Angeles and southern coast 
towns escape this wind, since there is no valley of the Kind behind them. 
Were it not for these winds, however, which come in to cool the great 
valley, living there would be almost unbearable in summer. In winter 
when the valley is colder and it does not get heated by the sun, the winds 
on the coast stop blowing. 


The tendency of fires in these valleys is to occur at night or in the 
early morning. Many commercial brick and frame buildings are constructed 
with large square and rectangular wells reaching from grade floor to roof, 
and most if not all buildings have as many openings as possible. This mode 
of construction, while it tends towards comfort in the heated term by form- 
ing strong currents of air, is most disastrous when fire occurs. During the 
heat of the day shades are drawn and blinds closed, but as evening ap- 
proaches, all protections are avoided to create as much draught as possible, 
and so remain, as far as consistent, until morning. Many inventions are used 
to do away with wood and coal because stoves, grates, etc. , heat the apart- 
ments unduly. For this reason, gas, gasoline and kerosene oil stoves and 
every known combustible device is used for cooking, and kerosene, gas and 
electricity for lighting. Gas is often left burning to be affected by the night 


draughts, and glass lamps with choked and foul air ducts, to explode, thus 
adding to the danger from fires. Ignition is rapid under such circum- 
stances, and fire, when started, travels fast where wood and fabrics are 
like tinder. 

In adjustment of losses throughout this section, it is found that in nearly 
every instance where fires are extinguished the premises were deluged 
with water, thereby entailing more loss by this method, to stocks especially. 
than by fire. 


As near as can be estimated, there is not to exceed an average of 15 per 
cent, moisture in the atmosphere during the summer months, and during 
the heat of the day the percentage of moisture is much lower. Another 
element has to be contended with in these great valleys, and that is incen- 
diarism. Through this tract runs the highway of railroads. It is the 
paradise of the traveling tramps. Investigation has developed the 
existence of regular societies, the object of which is arson and theft. 
One notable gang, calling themselves "H. O. H. A.," meaning **Hit one. 
hit all," was composed of boys ranging from eight to sixteen years of 
age, and they destroyed much property before being caught and placed 
where they could do no further harm for years to come. All these conditions 
entail expense to the underwriters, as may be readily understood. 


With the exception that in crowded cities, where there is a little more 
carbonic acid gas than in the country, the ratio of oxygen to nitrogen in 
the composition of the air, does not vary. The density of the air. however, 
does vary, or in other words, a given volume of air will weigh more at sea- 
level than the same volume at a higher elevation. 

This valley is practically at sea-level, where the barometric pressure is 
about 30 inches. Registration at one mile would be about 25 and at two 
miles about 20. I quote altitudes in which Pacific Coast agencies write. 
Therefore we have in this valley, as explained in the foregoing, an atmos- 
phere containing the maximum amount of oxygen, the presence of the fire 
bug, the greatest extremes of heat, an inadequacy of rates, and in 
comparison, the history of insurance shows a loss, as every underwriter can 
testify. I suggest these factors for consideration. 


It is often stated that in conflagrations water feeds the fire to an 
appreciable extent. Scientifically, I don't believe water augments the fire, 
for the following reasons: The latent heat of steam is very great, that is. 
water to be converted into steam absorbs an immense amount of heat, 
and during the process, as used by fire engines, absolutely tends towards 
cooling and putting out the fire. This is true of any volume of water 
however used in extinguishing fire. Again, after water is converted into 



steam it requires a further amount of intense heat in order to be 
decomposed into its component parts, viz., oxygen and hydrogen — and this 
heat is exactly equivalent to the amount of heat liberated when the 
elements combine again to form water. In other words, even if hydrogen 
gas was formed, which at times may be true, the amount of heat liberated 
by the burning of the gas is neutralized by the equivalent amount 
of heat absorbed in the first instance in forming the hydrogen gas. 

Let me again reiterate this last statement, and the same will act as a 
clincher, for I state that water, being already a product of combustion, 
is incapable of further oxidation or combustion, for in general terms com- 
bustion is nothing but a rapid oxidation. However, I believe that water 
should be used as sparingly as possible in extinguishing fires, for reasons 
before stated, and a more general use made of chemical engines. It is 
my opinion that when the cities and towns of this great valley are prop- 
erly equipped and efficiently manned with these appliances, and used as 
an auxiliary to a good fire department and water supply, the payment of 
all losses made upon sixty days time, as provided in the printed con- 
ditions of the policy, and a further protection afforded by the loss or value 
or co-insurance clause, then, and then only, will the investments of 
insurance companies return a proper percentage of profit. 


In all frame buildings on this Coast the principal woods used in 
construction are Oregon fir, spruce or pine, California redwod and mountain 
pine (Sierra. ) All these trees are formed of rings of a ligneous and fibrous 
natures There has never been, to the writer's knowledge, a chemical 
analysis made of these woods, and researches through all statistics issued 
by the forestry bureau of the United States, as well as correspondence 
with many chemists throughout the world, fail of giving the desired infor- 
mation. The only chemical analysis I can quote is that relating to the 
pitch pine of the South, which is analogous to our pine on this Coast, in 
part, and will show somewhat of its volatile nature. 

From one cord of pitch pine, distilled by chemical analysis, the fol- 
lowing substances and quantities were obtained : 

Charcoal 50 bushels 

Illuminating gas, about 1.000 cubic feet 

Illuminating oil and tar 50 gallons 

Pyroligneous acid 100 gallons 

Spirit of turpentine 20 gallons 

Wood spirit 5 gallons 

Pitch and resin iy 2 barrels 

Tar 1 barrel 


We all know resin is a strong component part of Oregon fir and moun- 
tain pine. In all fires coming under my observation, as soon as water 
strikes, the ligneous rings contract and from the fibrous part exudes resin 


and other combustible compounds, which readily attract flame, and while 
the same relative action takes place in redwood, yet no resin is exuded; in 
fact, it has been stated that a substance having the nature of tannin and 
which is antagonistic to further combustion, is formed, thereby temporarily 
protecting- the wood. How this acts is not known, but I will offer as a 
possible explanation the following : In the first place the substance itself 
may have a high ignition point, requiring a high temperature to take 
fire and burn, or what seems more plausible, holds non-volatile, inorganic 
salts; that is, mineral salts in solution, which, coating the burning sub- 
stance, excludes the air and prevents further combustion. The foregoing 
facts are greatly in favor of redwood as a building material, but it must be 
borne in mind that both woods will burn. 

In the main, in frame buildings (except in the Sierra mountain regions). 
Oregon fir is mostly used in construction for joists, studs, rafters, roof 
sheathing and floors, for Oregon fir has almost the same wearing qualities 
and strain as oak. Redwood is used for mud-sills and underpinning, 
siding inside and out, ceiling, shingles and window and door casings. 
Sashes are of mountain pine, and doors of mountain pine and redwood. 
Nearly all rough inch stuff is redwood. In the Sierra mountain region. 
mountain pine is mostly used throughout. This latter wood is more 
closely allied to Southern pine than is Oregon fir. 

A very excellent recipe I give which is cheap and now used in many 
places, and could it be used on and in sawmills, mining plants, manufactur- 
ing establishments, warehouses, barns and out-buildings, it Avould have a 
material effect in reducing the fire waste. The recipe is as follows : 


Soak the asbestos for 24 hours in a little salt water, then mix % lime to 
% asbestos with silicate of soda to the consistency proper to lay on with a 
brush. Silicate of soda can be obtained cheaply by the barrel, or glue can 
be substituted for the silicate of soda, or molasses is a satisfactory substi- 
tute. The asbestos coating should be mixed about the same as whitewash 
and applied in the same way. Two coats should be applied to the surface 
desired to be covered. 

I don't know as it is within the province of this association to prescribe 
remedies, but I believe specials carry with them recipes for snake bites, 
cold feet, and other contagious complaints, and this would be a fitting 

I am indebted to Mr. Chas. G. Yale for facts on the trend of the wind. 
and to Dr. Harry East Miller for chemical data. 


President Ives — Our programme is ended. We have still twenty 
or twenty-five minutes, and I think in the meantime the Asso- 
ciation might hear from the committee appointed yesterday to 


consider the Presidents address. Mr. Lowden was chairman of 
that committee. Is he ready to report ? 

Mr. Lowden reads report. 


Your committee appointed to consider the suggestions made in the 
President's address, and to recommend some plan for carrying them out, 
find that in the limited time at their disposal they can only touch very 
briefly on the various subjects. 

The unsatisfactory condition of the by-laws referred to by the President 
can, and no doubt will, be remedied at this meeting. 

The careless and too liberal manner in which partial losses are adjusted 
and paid, is deserving of severe criticism, but your committee cannot sug- 
gest a remedy. This is not a subject which can be handled by agreement 
or compact between companies or managers. Each manager must be indi- 
vidually impressed with the necessity of a reform in this department of our 
business, and must decide for himself that so far as his company is con- 
cerned, the practice will be stopped. The too liberal settlement of a 
single claim in a community injures the business to much greater extent 
than the loss of the money. It induces the feeling that losses are not 
criticized or carefully handled by insurance companies, and that because 
one claimant is overpaid, every other should be treated in like manner. 

The subject of a co-insurance clause is one of too great a magnitude to 
be discussed in this report. Your committee are unable to agree on a plan 
or recommend any definite action by this Association beyond expressing the 
conviction that some agreement should be made with the policyholder 
which would compensate the companies for the extra loss caused by insuf- 
ficient insurance. 

Your committee would recommend that the Three-fourths Value Clause 
be universally adopted (except on wholesale stocks). 

We believe that its use would be of great benefit to the business — 
restraining the incendiary and protecting the honest property owner. 

Many of the forms of mortgage clauses now in use on the Coast are 
objectionable from our standpoint, and a remedy is badly needed. 

The objectionable features are simply the result of the efforts of the 
various loan associations to obtain that to which they are entitled (at the 
proper price ) , viz: absolute indemnity. 

Any consideration of the present evil must recognize the right of these 
associations to buy what they want, and to buy it on the best terms and 
under the most favorable conditions. 

We are selling indemnity (as collateral), and they need it. Our duty to 
our companies and to these our customers, is to frame the contract in such a 
manner that both interests will be fully protected. 


The standard form of mortgage clause does not meet the wants of the 
loan companies, and so long as this is the case, just so long may we expect 
trouble and dissatisfaction. 

2. Any attempt to force upon the mortgagees a clause that will not pro- 
tect them to the fullest extent will meet with defeat, for the simple reason 
that insurance companies will always be found who will waive some of the 
conditions, and these companies will get the business. We are in this way 
making the attaching of a mortgage clause to a policy the subject of compe- 
tition, and thus the infraction of a rule is made profitable. 

It follows therefore that the adoption of the present standard form by 
the Pacific Insurance Union, and the attempts of that organization to com- 
pel its use in all contracts with the loan companies, must result in failure. 

It is clearly the duty of the companies to draw up a form of agreement 
which will give to the mortgagee the security he desires, and for which he 
is willing to pay. By doing this we remove the temptations to waive con- 
ditions which must exist if the present form is insisted upon. 

That this can be done we do not see any reason to doubt. As we under- 
stand the matter, the loan companies demand certain privileges not 
accorded them in the standard form, viz : 

First — That loss shall be payable to the mortgagee or his assigns. 

Second — That loss shall be payable to the owner or mortgagee as their 
interests may appear. 

Third — That the contribution clause shall be eliminated from the 

Our principal objection to the first clause is that cancellation is rendered 
difficult because of the possibility that the policy may be held by some 
assignee of the original mortgagee whose address may not be known to the 

Could not this be avoided by inserting a clause that the usual ten days 
notice served on the original mortgagee named in the contract would be 
sufficient to effect cancellation. 

It will be found on examination that this clause is required by mortgage 
companies who loan specific sums of money for their clients, and when the 
note and mortgage are executed, assign the securities to these clients, and 
subsequently act as agents for the collection of the interest. If this is so. 
it can be no great hardship to the loan company to impose upon it the duty 
of notifying its client of a cancellation, as it is presumably in communica- 
tion with him. 

The objections of the insurance companies to the second clause, (viz : that 
loss shall be payable to owner and mortgagee as their respective interests 
may appear,) seem to be that the courts have construed this clause to cover 
the passing of title from the original owner to the mortgagee, and that 
during foreclosure proceedings and sheriff's sale, the policy is continued in 
force in violation of the printed conditions. 


The insurance companies' construction of this clause has always been 
that the loss shall be payable to the parties named, in proportion as their 
several interests in the property bear to the total value of same, but it was 
never intended by us, nor perhaps by the loan companies (originally) to 
mean that a change in title was covered, or that the policy conditions 
regarding foreclosure proceedings should be waived. 

To meet this ruling of the courts, is it not possible to insert a clause to 
the effect that, change of title to the property is not intended to be covered, 
and that the conditions regarding alienation of title and foreclosure pro- 
ceedings are in force, notwithstanding our agreement to recognize the 
claims of the different parties in the payment of a loss. 

The elimination of the contribution clause is not as objectionable as it 
would appear at first sight, and we think that all objections can be removed 
by the insertion of a clause in the contract, providing for subrogation when 
there is other insurance on the property not payable to the mortgagee. 

The mortgagee has rights which we must respect or go without the 
business, and it his right to ask for a policy to protect his interest. He is 
not protected when the contribution clause is inserted, unless all the policies 
on the property are payable to him — in fact the greater the amount of in- 
surance not payable to him, the less will be the protection afforded by the 
policies in which he is named as payee. 

It would seem wise, therefore, to insert in the standard form, in lieu of 
the contribution clause as we have it, one providing that in the event of the 
existence of other policies on the property, the loss under which is not pay- 
able to the mortgagee, this company shall be subrogated to the rights of the 
mortgagees to the extent of the amount paid by this company, in excess of 
its pro rata proportion of the loss. 

These changes would, in the opinion of your committee, harmonize the 
different interests without injury to either, and remove the temptation 
which now exists to secure business by granting concessions without proper 

We would respectfully suggest that a committee be appointed to consider 
this important matter and to recommend a form for adoption by the com- 




President Ives — The suggestions, I think, are valuable, and I 
hope the members will adopt some plan by which they may be made 

Mr. Sexton — There is a month or two months work on that 
report, particularly on Mortgage Clause, and I move that a commit- 
tee be appointed of say. five. 


Mr. Watt — There are two recommendations, Mr. Sexton. 

Mr. Sexton — What was the other ? 

Mr. Watt — The Three-quarter Clause. 

Mr. Sexton — The Mortgage Clause is the thing to work on — the 
Three-fourths Clause is very simple, merely needs the endorsement 
of a proper committee. 

President Ives — Was there a motion put ? 

Mr. Swett — I was going to make a motion to substitute the rec- 
ommendations in reference to the three-fourths clause being submit- 
ted by the secretary to the executive committee of the Pacific 
Insurance Union and the committee preparing that report be con- 
tinued until they prepare a proper mortgage clause. I move that they 
be continued. 

Col. Kinne — Second the motion. My idea is this: the committee 
is a good one. Mr. Lowden has at last crystalized his ideas and put 
them in good shape and I think he will do the work whether Mr. 
Smalley is here or not. Brother Sexton can assist him. 

Mr. Lowden — I don't wish to shirk any work. I think the com- 
mittee ought to be added to; we need help in the matter. It is a 
very important matter, something that requires a great deal of time, 
and if Mr. Watt will change his motion and include it to read five 
members, it would be better. 

Mr. Watt — I accept the amendment. 

President Ives — The motion then before you — Mr. Watt, will you 
kindly put it in shape? 

Mr. Watt — First that the recommendation in reference to the 
Three-quarter Value Clause be referred to the Pacific Insurance Union, 
and second, that a sub-committee be raised to report on these other 
matters. That the committee be added to by the Chair. 

President Ives — You hear the motion: those in favor say aye. 
The motion was carried. . The Chair will add to that committee Mr 
Osborn and Mr. Paymonville. 


Mr. Sexton — There was a small matter referred to a special com- 
mittee. A committee was appointed of five members ; I was the 
chairman. Mr. Chalmers, Wetzlar, Wilson and Mr. Kinne. Mr. 
Kinne has the report as usual; I escaped doing the work and will 
make the report. 

President Ives — Will you read the statement ? 

Mr. Kinne — Mr. President and gentlemen, this committee was 
appointed a month ago to report at this meeting, and we have 
brought in the following report. Mr. Chalmers is not in town and 
did not sign it. 


Mr. Stephen D. Ives, President Fire Underwriters' Association: 
Dear Sir : — 

At the meeting of the Association, held yesterday, a resolution was 
adopted requesting you to appoint a special committee of five to consider the 
apportionment of losses under certain conditions in Oregon. 

The hypothetical case presented is as follows: Company A insures a 
building for $1,000 prior to the adoption of the Oregon Valued Policy Law. 
Company B insures the same building for $1,000 prior to the adoption of the 
Oregon Valued Policy Law. Company C insures the same building for 
$1,000 subsequent to the adoption of the Oregon Valued Policy Law. A loss 
occurs. Company A sends its own adjuster, Company B sends its own 
adjuster, and Company C places its interest in the hands of the adjuster of 
Company B, who therefore represents B and C. 

In adjusting the loss the adjusters ignore the Oregon Valued Policy Law 
and the assured does not invoke it. The amount of the loss is submitted to 
appraisal and the award is $2,700; the amount of insurance is $3,000. How 
shall the loss of $2,700 be apportioned among the companies at interest? 

The foregoing, while a hypothetical case, is identical in every detail 
with a bona fide case, with the exception that the amounts covered are not 
the same. 

Yours very truly, 

ROLLA V. WATT, Manager. 


Regulating the amount to be paid on a policy of insurance. 

Be it enacted by the Legislative Assembly of the State of Oregon : 

Section i. That the amount of insurance written in a policy of insur- 
ance on all buildings insured after the passage of this act shall be taken and 


deemed the true value of the property at the time of the loss, and the 
amount of the loss sustained, and shall be the measure of damage, unless 
the insurance was procured by the fraud of the insured, or the loss was 
caused by the criminal act of the assured. It shall be lawful for any insur- 
ance company, liable to pay losses occasioned by fire, to rebuild any structure 
or building wholly or partially destroyed of the same style and materi- 
als and of equal value with the one so wholly or partially destroyed, but 
they shall make their election so to do within thirty days after notice of 
loss. In case there is a partial destruction of the property insured no 
greater amount shall be collected than the damage sustained. 


"Company A insures a building for $1,000 prior to the adoption of the Ore- 
gon Valued Policy Law. Company B insures the same building for $1,000 
prior to the adoption of the Oregon Valued Policy Law. Company C insures 
the same building for $1,000 subsequent to the adoption of the Oregon Valued 
Policy Law. A loss occurs. Company A sends its own adjuster, Company 
B sends its own adjuster, and Company C places its interest in the hands of 
the adjuster of Company B, who therefore represents B and C. 

"In adjusting the loss the adjusters ignore the Oregon Valued Policy 
Law and the insured does not invoke it. The amount of the loss is submit- 
ted to appraisal and the award is $2,700; the amount of insurance is $3,000. 
How shall the loss of $2,700 be apportioned among the companies at 


Under the above example, your committee's solution is as follows : 

It being understood that the building was totally destroyed by fire, and 
that all the policies contain the conditions of the standard form, viz : "This 
company shall not be liable under this policy for a greater proportion of any 
loss on the described property than the amount hereby insured shall bear to 
the whole insurance." 

In the case named the insured did not invoke the Oregon Valued Policy 
Law, and therefore in accordance with the conditions of their several 
policies each pays $900, making the total sum of $2,700, which is the amount 
of the loss actually sustained. 

In case the insured had rested upon the Oregon Valued Policy Law, 
Companies A and B would pay in accordance with the conditions of their 
several policies, as above stated, in proportion to the whole amount of insur- 
ance, and each would pay $900, being their proportion of the amount of the 
loss as ascertained by appraisement. Company C would pay $1,000, in accord- 
ance with the same policy condition, but basing the amount of the loss on 
the Oregon Valued Policy Law, which states: "The amount of insurance 
written in a policy of insurance on all buildings insured after the passage of 
this act shall be taken and deemed the true value of the property at the 


time of the loss and the amount of the loss sustained, shall be the measure 
of damage." 

This, of course, gives the owner $100 more than his actual loss, which is 
the feature of the Valued Policy Law. In case all the policies had been 
written after the enactment of that law, the owner would have received 
$3,000, each company paying $100 more than it properly should pay to actually 
indemnify the insured. In case the companies mutually agreed to replace, 
of course they would pro rate in the expense of replacing, whether it would 
be $2,000 or $2,700 or $3,000. 





Mr. Watt — Mr. Chairman, I wish to express my gratitude to this 
committee for deciding this question in a proper manner. I had a 
long controversy and correspondence in regard to it. The amount 
nvolved is less than $60, hence we could argue the matter on its 
merits without reference to the money consideration. 

But how great minds may differ in matters of this kind is fully 
exemplified in this case. This is a loss in which I was interested — 
with two other companies. The adjusters in apportioning the loss 
charged my company with its entire policy, dividing the remainder 
between the other two — the loss being less than total. This 1 seri- 
ously objected to. and we finally agreed to submit the question to 
arbitration, and selected three leading underwriters to whom the 
matter was referred. They considered it very carefully and finally 
arrived at a conclusion. Whether I can state that exactly as it is 
without having it in writing before me I am not certain, but 1 think 
it was as follows: 

There was in this case $100 salvage which the assured might have 
demanded but did not. My company being responsible for $1,000 
and the other two companies being responsible for $900 each, the 
committee awarded this $100 salvage, which the assured did not 
claim, to the companies in interest in proportion to the amount for 
which they were liable, viz: $900, $900, $1,000. Their reason for 
that was that my policy having been issued after the valued policy 
law was enacted, was in the nature of specific or non-concurrent in- 


suranoe, and must therefore contribute as such. I accepted the 
report as a basis of settlement in the case in hand, but objected to 
the principle and theory on many grounds, which I will not now 
mention. Believing* the controversy would be of interest, I presented 
the case at the last meeting of the Association, and it was referred 
to this committee, which, as I said in the beginning, I think it has 
decided correctly. 

Mr. Carpenter — I happened to be one of the arbitrators in the 
case. Mr. Watt has correctly stated the results of our con- 
sideration; this $100 we regarded as salvage which the assured had 
a right to claim. They decided that the salvage should be divided 
the same as you would divide discount of payment before the loss 
was due or anything of that kind. It was at a time when all of us 
were very busy in connection with Pacific Union matters. I am 
quite willing to admit we may have been wrong, at the same time I 
think there was a good deal of reason for deciding as we did. 

Mr. Lowden — As one of that committee I will not go as far as 
Mr. Carpenter and admit we were wrong ; I think we were right. I 
think we had to look upon it as salvage. 

Mr. Kinne— Not at all. 

Mr. Lowden — The assured had a right to claim $2,800 on a $2,700 
loss. I still think it is proper that it should be divided between the 
three companies, according to their individual amount balance of 
the claim, and I won't take back any of it yet. 

Mr. Gunnison — I will differ from Mr. Lowden in regard to that. 
I do not think it could be considered salvage for the reason that the 
first two companies are not interested in that $100 at all. If they 
paid according to contract, they would pay $900 each, and the other 
would pay $1,000. Now, if the assured saw fit to waive that, the 
$100 should go to that company and the others have nothing to do 
with it whatever. It was actually a present from the assured to the 

Mr. Dornin — Two features seem to suggest themselves in the case: 
Was the assured aware of his legal rights under the last policy 


issued? If not, and the facts being withheld from him, and he 
induced to enter into a stipulation and accapt the settlement made, 
had he not a right to afterwards upset the settlement, and bring 
suit to reopen the adjustment and thereby secure the whole of the 
$1,000 which he was entitled to? The alleged salvage of $100 per- 
haps should have been retained by the company in order to defend 
the suit which he might have made against them. Another is that 
the company having received 10 per cent, additional premium to 
cover an excessive hazard had no right to complain. They were 
not in a position to kick, as they received extra compensation 
for it. 

Mr. H. M. Grant — It does not seem to me that companies A and 
B had any right whatever to the $100 salvage; that was entirely 
independent of them. Companies A and B could not be expected to 
pay any more than $900, and would certainly be entitled to nothing 
by reason of salvage which company C made. 

Mr. Dornin — There were a number of companies interested in a 
loss at Helena, Montana, several weeks ago. The policies were 
almost all non-concurrent policies in A, B, C, D and E warehouses. 
One was burned. Some of the policies had the Distribution Clause 
and some did not. It happened unfortunately that the Hartford 
had to change their policy, and in some way they were elected for 
the whole, having been placed specific in the burned warehouse. 
They w^ere represented by a most excellent man who apparently 
controlled the final adjustment. The proof, as prepared for the 
National, stated that the policies were concurrent throughout. The 
papers were brought in and a convention of the companies was held 
to attempt to re-open the whole matter. The Hartford naturally 
kicked. I will leave Mr. Belden to tell the rest. 

Mr. Belden — I will say we are not accustomed to kicking ; I think 
I can say that safely. We stood upon our contract. We had no 
contract with the other companies, which they tried to make us 
believe we had. Our loss was adjusted upon contract as determined 
with the assured. The amount involved was a matter of a few 


dollars, but these companies thought they saw an opportunity of 
jumping' on the Hartford pretty hard, but they missed their jump 
and came short. The facts were, the policies were transferred with 
the intention of their being concurrent, covering in a group of 
buildings. They originally were covered with the Average Clause. 
It was the intention of the assured to have them cover concurrently 
in the occupied buildings. The amount covered in the buildings 
burned was only about one-fifth of the amount in the adjoining 
warehouse, which would show that it was not intentional to cover 
in that house. It should have been sufficient evidence to the other 
companies that it was a clerical error, and the assured, although it 
was a loss to himself, stated the truth that it was his intention to be 
made concurrent. Therefore, in the settlement of the loss, he was 
the loser some $300, notwithstanding he made the statement that it 
was his intention to be made concurrent. The adjusters were on the 
ground, and it was so understood, and the adjustment made on that 
basis. Several companies — two I believe — the Liverpool & London 
& Globe and the German- American — paid their loss. The other com- 
panies protested on the proofs being received here, and took the 
ground that the adjustment was made on a contract with the 
assured. We had no contract with the other companies, and they 
thought that they could prove collusion whereby it could be shown 
that we had an understanding with the assured. 

Mr. Dornin — The matter was seriously complicated. The numer- 
ous adjusters had allowed proofs to be made out, and it was very 
difficult to remodel them, but happily it was finally arranged. 

Mr. Gunnison — I would like to inquire if you have to bring in a 
separate proxy for each member, or can two or three members 
sign the same proxy ? 

President Ives— I think it requires a separate one for each 

Recess taken until 2 P. M. 



San Francisco, Feb. 21, 1894. 
The afternoon session was called to order. President Ives in the 

The Chair — Next in order we have a paper from Mr. Driffield on 
; 'The Press as an Adjuster." Some of us have had an experience 
with it. 



During the year which has elapsed since our last annual gathering-, few 
matters of greater moment to the insurance fraternity have occurred 
than the adoption by loss claimants of an innovation in their manner of 
pressing claims against the companies — by the employment of the medium 
of the daily press. 

In the past, whenever the fact of a dispute between the assured and 
the companies became public — generally by means of a lawsuit — we have 
been subjected to occasional harsh criticism and unjust reflection at the 
hands of the newspapers, but have been accustomed to regard the same 
as the expression of a public sentiment — invariably in favor of individuals 
as against corporate interests. To such criticism we have grown callous, 
regarding it as an unjust, but somewhat natural, comcomitant of our 
business, and one which we invariably weighed and discounted when 
considering the advisability of resisting claim under a policy. The influ- 
ence created in the minds of the public by such means was and is, however, 
undoubtedly hurtful, but to so limited an extent as to be lightly treated 
by the companies. 


The employment of the leverage of the press for the purpose of bolstering 
up and endeavoring to enforce the settlement of fraudulent and exorbit- 
ant claims, and with the view of influencing the minds of court and 
juries, when such claims are the subject of judicial inquiry, is, however, 
a new departure on the part of the loss claimant, and if such procedure 
is to receive any recognition and is permitted to remain unchecked, we 
may as w^ell reconcile ourselves to the inevitable — dispense with the 
services of our qualified adjusters and permit the daily press to usurp 
their functions, gratefully ackowledging its leniency in the case of a 
partial loss, and solacing ourselves upon the absence of a bill for adjust- 
ment expenses. 

When such a time arrives, however, a general valued policy law will 
have no terrors for our fraternity. 


The venality of the local press is a matter of open and undisguised 
comment, and appears to be accepted by the public as a condition of 
affairs for which no remedy can be applied. For a stipulated amount of 
lucre the columns of the papers appear to be at the disposal of any pur- 
chaser, no matter how unclean, and for purposes regardless of their 


It is doubtful whether any community has hitherto witnessed so 
flagrant an outrage upon the ethics of journalism and so gross a prosti- 
tution of the implied prerogatives of the Fourth Estate as those which have 
characterized the commentary of the daily press upon the action of the 
companies in their conduct of two recent loss matters. 

In one case the assured, instead of invoking the authority of the law to 
decide the questions in issue, sought to obtain their objects by retaining 
the newspapers as special counsel in their behalf, and if false statements, 
vilification and denunciation could have achieved their desired ends, the 
press would have triumphed in the contest and have been conceded a com- 
manding place in the roll of successful attorneys. Fortunately, however. 
the seriousness of the situation was realized by the companies, and. in 
face of public clamor, aroused almost to white heat by the slanderous 
edicts of the press, it has been determined that the time has not yet 
arrived when we shall bow to the dictation and accept the jurisdiction of a 
time-serving, corrupt and hired manipulator of so-called "public opinion." 

In the other case, a still more flagrant abuse of the liberty of the press 
was demonstrated in its comments upon matters which were already partly 
submitted to a court and jury, and in its attempt to influence the minds of 
the tribunal by the publication of questionable facts, which had been ruled 
out of evidence by the court as being incompetent and irrelevant. By such 
publication, evidence, clearly nugatory, was practically introduced before 
the court, the minds of the jury were affected thereby, and the object of 
the articles consequently attained. To such lengths was the apostacy of 
the press invoked in this latter case, that an absolutely groundless and 
most malicious charge of subornation of perjury was openly made against 
the defendant company in the columns of the dailies, and the sole result of 
the emphatic protest of the attorney for the defendant, was the expres- 
sion of the court of its disbelief in the truth of the assertions made, and 
an injunction to the jury to entirely disregard any evidence outside of the 
record. By this time, however, the mischief intended had been accom- 


The contract of insurance is no more a matter of public concern than 
any other contract entered into between individuals, and the respective 
parties thereto are amply provided, under the conditions thereof, with the 
means of enforcing their rights thereunder. 

The interference of the press, or of the public, in matters which should 
concern no one except the parties to the contract, is, therefore, unwarrant- 


able and ill-advised, and the censorship which is sought to be established 
over action taken under the expressed terms of such contract, is arrogant 
and insolent. If, however, such commentary were undertaken with the 
bona fide intention of doing fair and impartial justice between the parties, 
little or no objection would be raised by the companies at the honestly- 
conceived, though still unwarrantable, assumption by the press of its right 
of criticism, for no one of us, save those who had laid themselves open to 
just and warranted censure, would then have aught to fear. 

But it is idle for us to indulge in any such Utopian expectations. As an 
adjuster the press is a "bulldoser," pure and simple; open to hire by either 
party, and prepared to create "public sentiment" upon a sub-stratum of 
falsity, vituperation and injustice, as opposed to legality, reason and 

It is unfortunate that a considerable portion of our populace prefer 
rather to purchase their ideas ready-made than to run any risk, in the 
matter of wear and tear on what the Almighty bestowed upon them in the 
shape of minds, in arriving at their own conclusions, and to this fact is due 
a large proportion of what is termed public sentiment, which is frequently 
but an apparent unanimity in the expression of ideas, voiced by the press 
and probably conceived solely in the mind of an imaginative or carefully 
instructed newswriter. 


To the want of confidence in ourselves and in our position in the com- 
munity is due the feeling of solicitude and apprehension aroused in our 
circles by the adverse criticism of the press, and, in order to secure an 
immunity from such, it is necessary that we should show a united front in 
opposition to the methods adopted by this newly-conceived "adjuster" for 
the claimant, and that we should not only decline to allow ourselves to 
be influenced in any manner by its rantings, but should demonstrate 
by our actions that the same resulted unfavorably to the claimant employ- 
ing such means. The public would not be dilatory in recognizing the fact 
that the employment of the press as its adjuster was not conducive to its 
best interests. We might hope for some reforms if we unanimously 
adopted retaliatory measures by the withdrawal of our patronage, which 
represents a considerable revenue, derived from our advertisements and 
subscriptions, both official and private, and a course of such discipline 
might result in changing a present inquisitor into something resembling 
an adjuster. 

As at present constituted, however, the conclusion can scarcely be 
avoided that as a newsgatherer the press is unreliable; as an educator, 
is sensational, not to say immoral ; as an advocate, mercenary and insincere ; 
and as an adjuster, not to be seriously considered. 



Mr. Lowden— I would like to introduce Mr. F. A. Thompson, of 


Denver, a member of the firm of Cobb, Wilson & Co. of that city. 

The Chair — I think we will all take pleasure in welcoming Mr. 
Thompson. Many of us know of him. 

The members of the Association rose and welcomed Mr. 

The Chair — I don't know as there is any member who may feel 
like making any remarks. It is. as Mr. Driffield says, a recent 
innovation. I have thought that the press might justly be used by 
the insurance managers to educate the public to our mutual advan- 
tage — direct advantage, probably, to the newspapers, and indirect 
to the public and the companies. 

If this paper does not lead to any discussion, the next business 
will be the 4i Adjustment of Partial Losses, "to be read by our 
Secretary, Mr. Osborn. 



The history of underwriting is replete with vain effort. It demonstrates 
how thoroughly impotent are those arguments that tend to correct the errors 
of practice. We convene annually to hear excellent papers read, their 
merits and demerits discussed. As often, we depart from these rooms 
wiser, but no better in practice. This paper will have served its purpose, 
if it but suggest to one or two thoughtful minds, the considerations that have 
for some time been thoughts of personal study Avith me. 

The adjustment of loss is essentially as important as the assumption of 
the risk. It involves the dispensation of company funds ; but there is really 
no function of management so indifferently considered. Much attention is 
paid to the expense account, and rightfully too, but this appears to be the 
only item that companies and managers strive to reduce. It is the frenzy of 
extravagance, in the adjustment of partial losses, that is a severe drain 
upon the resources of underwriting capital to-day. Our present condition 
is indeed one of doubt and concern, and it must be obvious to everA^ manager 
that remedial effort should be put forth. 

The methods in vogue are a travesty of the real meaning of adjustment. 
Inexperienced men are sent to "adjust" a loss, and they have only a slight 
conception of the contract they are called upon to interpret. The character 
of the property damaged or destroyed is unknown to them, and the first act 
is apt to be a waiver or a settlement "for the companies' interest." If they 
be not wholly unacquainted with the necessary steps to take, the adjust- 
ment is attended by a secluded ignorance, which may be a tribute to the 
value of a generous impulse. 


Our contract means "indemnity," yet how few adjusters, and especially 
those belonging to the company, carry the question to a literal fulfillment of 
its meaning? If the loss actually reach $500, the assured will manage to 
squeeze another $50 or $100 out of the company and it is allowed. This is 
prodigality or possibly charity, but not indemnity. What distinguishes 
the modern adjustment from charity is, that the recipient has paid a pit- 
tance for the gift. Now we appear to be constantly attuning ourselves to 
this condition, and extenuate for it on the plea of expediency. Yet neces- 
sity is manifesting itself as a greater law. Arguments against this plea 
of necessity avail nothing by invoking expediency, for the expedient is but 
little removed from an abuse subsidized by a habit of slow but steady 
growth. In fact this is an age of translation ; free to be sure, but we trans- 
late 2 into 4 with equal facility of the trickster who puts an egg into the hat 
and produces a bird. 


The practice of submitting the adjustment of losses to local agents is 
another mistake, and is wanting in every element of consistency or reason. 
Adjustment is in itself an art, a system of adjudicating differences between 
the contractors, and should not be hindered or embarrassed by the environ- 
ments of local interests, strife or influence. The man who has solicited the 
assured and possibly exhausted every argument to win his client, is not 
the man to sit in judgment at a time when the contingency insured against 
has happened. It is surely an indelicate position for the agent to be at issue 
with the assured, and especially so if the differences are attributable to 
mutual misunderstanding. It is sure that the said agent must fail to 
properly "adjust," whereby the company is not injured and the assured 
not wronged. But is it not true that every time the agent settles a 
claim, the assured is the gainer? With few exceptions, and some which 
are notable, such settlements cost the company from 10 per cent, to 50 
per cent. more. 

While in a town of the southern part of the state recently, my attention 
was called by an agent to a loss that he had adjusted, and for which, he 
states, his company paid $106.40. The claim in question arose in a store 
where some fancy worsted shawls were hung over or near a lamp. While 
the clerk was at dinner the lamp smoked and the soot damaged a number of 
articles within range. When questioned as to his answer for cause of loss 
as stated in the proof, he replied "smoke damage." He says the proof was 
passed without inquiry, and did not know until that moment but what the 
policy covered just such a case. 


In another instance the agent advised his company that the general 
merchandise store in his town had had a small damage ; that he did not 
think it would exceed $200, and wished instructions. The manager consid- 
ered it unnecessary to send an adjuster, as it would take a day to adjust 
the loss, besides the expenses, and instructed the local to take proofs and 


to draw on him for the amount. This was done, the loss claim being for 
$225. The policy covered "on his stock of general merchandise." Further 
developments revealed the fact that the actual loss to the stock was $95, 
the remainder being for "fixtures," not insured; also the assured' s over- 
coat, and a coat belonging to his clerk. Had this trip been made by an 
experienced adjuster, the actual loss would have been $95. Plus the per 
diem and expenses, $31.50 additional, or a total of Si 26. 50. Here would have 
been a saving to the company of $98.50, in addition to which would have 
been the education of the agent, which was worth infinitely more. 

A local agent in a large town recently reported to us a loss on contents 
of a dwelling. The loss was from exposure fire, and the "estimated 
damage" $175. I happened to be in town that day and went out to look 
after it. The local accompanied me, and together we went through the 
damage. He did not consider his estimate excessive, although it might be 
liberal. We settled, to the assured' s entire satisfaction, for $67.50. 

A prominent adjuster tells me of a case that he closed for $400, where 
the local agent had taken proofs for $1,050. The loss net was $300, but the 
assured threatened suit, and the adjuster compromised for $400. 


The following interesting case will show how much more liberal a local 
agent will be with the company's money than his own. A western manager 
tells the story that a few years ago, his company had a small loss in a 
Missouri town. The state agent was notified by the local of the damage. 
The policy covered on the dwelling of a banker of that town, and who was 
one of the agent's best customers. He requested the state agent to come 
at once and adjust the loss for him. The adjuster arrived, was met at the 
train by the local, and driven to the fire. He cast his eye over the damage 
and made notation of what he considered to be a fair figure, and submitted 
it to the local, who insisted that it was entirely too low, and that the banker 
would not accept such figure under any circumstances. He finally got the 
adjuster to raise the claim to what he believed to be fair and equitable, and 
they agreed upon this as the amount of damage. The state agent then 
proceeded to the office of the local to make up his proofs, and was astonished 
to find that the policy in his company had expired some forty days previous 
and not renewed in his or any other company. He immediately advised the 
agent, that under the circumstances his company was not liable. He demon- 
started that if the banker got any money at all for this loss, he, ' the agent, 1 
would have to pay it out of his own pocket, inasmuch as the banker had in- 
structed him to keep the property insured, and he had agreed to do so. 
When this dawned upon the local he saw the position in which he was 
placed, and entreated the adjuster to make up the proofs in the proper 
manner, just as though the policy had been issued. If it leaked out that he 
had not attended to the interests of his client he would lose his entire 
influence and much business in consequence. "But," responded the local, 
"if I must pay this loss out of my own pocket, I will see that he does not 
get a cent more than is owing him, and when we come to think it over, 
these figures are entirely too liberal, and I think that one-half of the 


amount would be more equitable and satisfactory." The loss was reduced 
50 per cent, and both the local and the banker evinced satisfaction. 


I do not mean to say that a claim should never be settled by a local 
agent. There are times when it may be necessary, but under such cir- 
cumstances, however small the claim, the proof should be sworn to. A 
man may many times coach his conscience and accept an excessive amount, 
and sign a proof for it, but he might hesitate to take oath that the claim 
was a true and correct one. In this we prevent, in a measure, excessive 
claims. But you must not forget that the agent is bound to be influenced 
by those conditions that serve him. His clientage is his support ; therefore, 
in the natural condition of things, his estimate must be taken cum grano 
satis. It is an inherent trait of human nature to exaggerate a claim for 
loss, and it is an anomalous failing of man to imagine his loss, his afflictions 
the greater, because they are his. 

Recently a local agent wrote a manager regarding a claim which he made 
arising from fire about as follows : 


They had been drying a two weeks' wash in the basement of the 
dwelling, and while his family was dining, smelt smoke. He immediately 
went into the basement and found that the smoke was so dense they could 
not get around very well, but discovered the fire and put it out with an 
ordinary garden hose. The agent stated in the letter that he did not think 
the damage would be great, although some of the property was burned. 
The manager sent him a proof of loss with a request to adjust himself 
and submit itemized statement, which he did a few weeks afterwards, 
making a claim of $280. Among the many items were 40 pillow slips, 14 
dozen napkins, 10 shirts, 10 table cloths, 20 sheets and 20 dish towels. 
The claim was afterwards "adjusted" and settled for $100. 

I remember not many years ago of a loss on a certain fancy goods store. 
A claim was made for $26,000, smoke damage. The adjuster visited the 
scene ; thought if he paid the sum of $250 it would be just about that much 
gain to the assured, for in his opinion the smoke damage, which was the 
basis of the claim, amounted to very little. To fortify his own opinion he 
called in an expert, who pronounced a judgment of absolutely "no damage 
whatever." The controversy continued between the companies and the 
assured for some time, when finally a compromised offer was made of $2,500 
and accepted. The assured, when questioned as to his excessive claim of 
$26,000, referred to a loss settled in this city some time previous, wherein 
it was estimated that about $30,000 over and above the actual loss had 
been paid. He did not consider that his claim, in view of that adjust- 
ment, was excessive. 

These cases are by no means uncommon or unfamiliar to you, but when 
thus presented they must inevitably recall the fact that the present system 


of adjustment is not only imperfect, but calculated to grow worse if not 
checked. I know there are those who disagree with me, but is it not an 
effort to extenuate for their own mistakes? In some instances they are pit- 
iful evasions, well adapted to the occasion. 

It may be quite as well to observe that leading principles regulate every 
department of underwriting, but sometimes modification so far intervenes 
as to render such regulations passive, if not inoperative. This but illus- 
trates how gracefully we accommodate ourselves to habit, and how prone is 
human nature to accept departure from well-defined procedure. The fact is 
we are constructed on the lines of subserviency, and the so-called "expedi- 
ent" is a law unto ourselves. 

The contract says the assured shall be "indemnified." and it simply 
means the literal capacity for replacement, of the policy. It does not mean 
overpayment, but just what it owes. 


The individual cases of extravagant payment of losses are of little con- 
cern, but the aggregate of money so overpaid tells a mournful tale. 

According to Mr. Moore, 90 per cent of the losses are 50 per cent and 
under, or in other words, of the 29,332 fires reported in 1892. 26.400 represent 
a loss of under 51 per cent of value. It is in this large number of fires that 
the excessive drain finds acceleration in the system of liberal adjustment. 

Each man represented as a loser in these fires, paid a specific sum for his 
insurance. He paid for indemnity and nothing more. Then why should he 
expect anything beyond reimbursement \ 

The term "liberal adjustment" is a contradiction in terms, to the extent 
that "adjustment" means the estimation of loss. Just so soon as you pass 
beyond the limit of his damage, you do not "adjust." but you "give." Of 
this large number of fires, fully 90 per cent were adjusted on the basis of 
liberality and not indemnity, and yet the constantly increasing fire waste 
does not, to any appreciable extent, serve to correct this. 

One manager contends that the large increase of loss each year is merely 
in tune with the increase of population and wealth. But this is not so. 
With modern improvements in the facilities for fire extinguishment, the 
advent of the chemical engine, etc., the total losses ought to diminish, and 
probably do. But total loss is not our concern ; it is the partial loss up to 50 
per cent, of the value that particularly interests us now. 


In 1881 the per capita loss in the United States was £1.60. while in 1891 it 
had arisen to $2.30, an increase of 44 per cent., and until within the last two 
years, rates on the downward grade. 

But let us examine further, and ascertain if this manager be correct. In 
the decade just mentioned, the population increased 12.500.000. only 2^ 
cent., showing an increase of per capita loss of 19 per cent, beyond its rela- 
tive advance. 


In the same period, between 1881 and 1891, the property value had 
advanced 52 per cent., a very large increase to be sure, but this apparently 
enormous increase affects land values to a much greater extent than it does 
personal property, and such property as is affected by insurance. 

Of the present valuation, 50 per cent, is land, money and minerals, which 
are uninsurable, and consequently do not affect the increase of per capita 
loss. In these ten years, land values have made marked progress, and their 
increase has been far greater than such property as would affect insurance. 

There is another consideration — the element of depreciation, and which 
in ten years is enormous. It would not approach the increase of value, but 
would operate to reduce the increase of personal property valuation to, say 
30 per cent. This would then show a net advance in per capita loss, after 
allowing for such advance, of 14 per cent., a surprisingly large percentage. 

This, then, is a development of facts to cause some apprehension, and 
especially when the year of '93 witnesses a fire waste of nearly two hundred 
million, an increase of more than 30 per cent, over the preceding year. 


In the analysis of losses of '92 we observe a varied increase over previous 
years in the causes of fires. 

Almost every hazard has increased, and were it not for the remarkable 
decrease of exposure fires in that year the showing would have been much 

We are far removed from a condition of safety, as the recorded state- 
ments of the companies would indicate, and we must now, more than ever 
before, turn our attention to adjustments. 

Of twenty-five companies whose income reached the million-dollar mark, 
the average loss ratio in '92 was 58 per cent., the average expense ratio 36 
per cent., and allowing the average dividend of 10 per cent, on the capital, 5 
per cent, of the premium income was devoted to this purpose, leaving 1 per 
cent, for a rainy day. 

This expense of 36 per cent, is too high, but not alone is this the disorgan- 
izing element ; the loss account must command equal attention. 

Having been assentive, it is most natural that you ask me to name a rem- 
edy. This paper is intended as analytic more than administrative, yet I 
would willingly venture the suggestion of remedy. To be concise, let it be 
in the intelligent application of careful inquiry and the rules of fair adjust- 
ment between the rights of parties. Let us stop this free translation of the 
contract. Make it literal. 

The assured does not pay you one dollar more in premium than you ask of 
him. Why reverse the proposition and pay one dollar more than he loses } 
Every dollar that you thus pay over a man's actual loss, develops an 
increased hazard. The law of development will soon convert this into its 

Commence to contravene the present custom of quick adjustments and 
settlements. Make inquiry into the loss beyond a few conventional ques- 



Our office sent some documents to one of our companies by express, and 
they were destroyed by fire. The clerk expressed the package as worth £20. 
The express company took six weeks to investigate that claim, and after 
ascertaining that the copies could be reproduced for $15, paid that amount. 

An Eastern manager recently sent a $25 banjo to his son at college. It 
was lost or stolen, and the railroad company made a most thorough investi- 
gation into the value of the instrument, and after four months he received 
a check for the $25. 

This was correct. These common carriers ••agreed" to deliver safely, 
certain things, or to "reimburse" the sender, and after sufficient investiga- 
tion they "reimbursed" and no more. 

This entire question becomes merged into the one issue of competent 
adjustment. It is undoubtedly true that the experience of companies shows 
conclusively that poor adjustments are a more frequent source of excessive 
expense than any other item. 

The president of a prominent company asserts that the year of "93 cost his 
company, over and above reasonable losses, about 5 per cent, of their premi- 
um income because of the prevailing system of adjustment. It is safe to say 
that if such be the experience of a company that is notoriously exacting in 
the details of this branch of its business, the general average would be 
much greater. In the year of '92 this 5 per cent, would have been a saving 
to the companies of eight million dollars. I should think that by the appli- 
cation of care and intelligence in the adjustment of our losses, a saving of 20 
per cent, could be made, and thus the net earnings for a given year could be 
very materially augmented. In '92 it would have reached one million dol- 
lars. It has been suggested before, and therefore not new with me. that 
our policies contain a clause similar to the average clause of marine policies. 


It may not be out of place to suggest that our contracts contain a provi- 
sion that no policy shall contribute for loss until the damage shall have 
attained a certain percentage, possibly 10 per cent. This would have a ten- 
dency to reduce the number of petty claims that are being constantly made, 
and which are always adjusted for about 50 per cent, in excess of the actual 
damage. The object is to insure for two-thirds or three-fourths of the 
value, and if it be the intention to make the assured responsible for a part 
of his total loss, why should he not be alike responsible for part of the dam- 
age i It is undoubtedly a fair assumption that protection in insurance should 
only be partial, and if we insist upon the assured being a co-loser with the 
company in partial losses, it will astonish us the extent to which this 
account can be reduced. 

Our province is to make money : the purpose of our business to afford pro- 
tection: the essence of the contract to insure : but the evidence of past y 
is very much against this assumption. 




The Chair — I am glad to see that Mr. Osborn has elaborated an 
idea that I merely touched upon in the address I gave yesterday, 
and it is worth a great deal more than passing consideration. The 
matter of adjustment, as he says, touches the vital interests of our 
business, especially the careless adjustment of small losses. I think 
it can be largely corrected by the individual efforts of managers of 
companies. It is evident that some change is needed, and it will 
undoubtedly follow. At former annual meetings we have had trouble 
in keeping the members here until we could carry out the business 
we had before us, and as everybody, I think, is anxious to hear the 
Knapsack read, we have decided to hold that to finish the session 
with, and I am satisfied we can retain every member in his seat. We 
have one or two telegrams here from absent members, one dated 
Seattle, addressed to the Association, says: "Snowed in, but cheer- 
ful, regret necessary absence. With best wishes." It don't say 
where he is snowed in, but it don't make any difference. Another 
telegram here from the far north: "I send you greetings from the 
far north. Hoping you have had a successful annual meeting and a 
good time at the dinner to-night, W. L. Chalmers." Possibly he is 
snowed in. 

Mr. De Veuve — In speaking of Mr. Osborn 's paper, he touches upon 
the adjustment of partial losses by local agents. I think it is a very 
important matter. Local agents sometimes allow very extravagant 
claims for damage and I think if managers would pay a little more 
attention and instruct their agents or send some special agent or 
some adjuster who is near the vicinity to represent them in the loss, a 
large amount of money would be saved in the adjustment of losses. 

Mr. Driffield — I do not think the local agent is altogether alone in 
his carelessness in treating partial losses. The adjustment of losses 
has been my chief occupation for the last three or four years, and I 
will state honestly for myself that I very rarely adjust a partial loss 
without feeling like kicking myself after I get through. I think that 
the difficulty which attends the adjustment of an ordinary partial 
loss is underrated by the majority of the members of this fraternity. 
In order to keep the assured, keep the business on our books and to 


get rid of the personal worry which is bound to accompany any dis- 
pute between the assured and the adjuster upon a small trifling loss. 
we frequently lose sight of what is correct and merely act upon 
expediency. I think that the total percentage of over-payments 
upon partial losses is really as much due to the carelessness of our- 
selves as of the locals, and while I am in accord with Mr. Osborms 
paper and the remarks of Mr. De Veuve that the employment of 
local agents in adjusting losses is not to be desired, I still think that 
we have to educate ourselves. 

Mr. Kinne — Mr. President, that brings to mind an instance in my 
experience of a loss where there were thirty-two companies interested. 
Thirty-one of the companies were represented by Mr. Chalmers, an 
independent adjuster, and one of the leading managers in this town 
gave the adjustment of his loss to his local agent to attend to. The 
amount of his policy I believe was $1,000 and the adjuster for the 
other thirty-one companies was greatly hampered in consequence. 
Xow. I think that is all wrong. Whenever it is possible, always have 
a practical adjuster or a special agent of some company represent you, 
particularly where there are a large number of companies interested 
and a large amount involved, and then no matter if a local agent may 
have been communicated with, it should be turned over to the 
adjuster unless he is known to be incompetent, which, in this case, 
was not the fact. Another case occurred to me when the paper was 
being read. That idea of no claims being made under ten per cent, 
seems to me to be injurious, for the policy holder instead of trying to 
put out the fire would let it burn until the loss reached eleven or 
twelve per cent, anyway. 

Mr. Wetzlar — I think the subject of Mr Osborn's paper of a good 
deal more depth than has been referred to by the other gentlemen. 
If you have a competent man at the helm to look into the cause and 
origin of a fire, a man of commercial and legal training, of good per- 
sonal habits, who has been educated to the business for which you 
intend him, you can depend upon his handling the adjustment of 
losses in the way they should be. I am opposed to appraisements, 
as too often appraisements mean the paying of exorbitant claims. 
In ninety cases out of one hundred, an appraisement means the 


getting together of two disinterested arbitrators, one of which is 
chosen by the assured and one by the company, both trying to do 
the best they can by their principals; but the result is very seldom 
satisfactory to the companies. Young men in the business should be 
selected for their intelligence and educated for the purpose of hand- 
ling losses. This is the age of specialties, and everybody in order to 
succeed must have his specialty. The medical profession is resolv- 
ing itself into specialties, and everything else in the same way. The 
manager sitting in his office may be the best manager in the world 
but no more able to adjust a loss than a boy. The adjusting profes- 
sion is a distinct branch of the insurance business which cannot be 
treated haphazard. Mr. Osborn's paper treats well upon the sub- 
ject and I am sorry to say I didn't hear all of it: I only heard part 
of it. It treats on the subject in a tangible way, but it does not 
cover a point in our business which we encounter every day. I per- 
sonally, as an independent professional adjuster, will be sent out on a 
large loss and be associated with very estimable gentlemen. They 
have been clerks and they are clerks and that is all. They have no 
more idea of the value of the property at issue or the conditions of 
the contract or liability of the company under the contract than a 
stranger, and still they are sent out by the company to interpret the 
legal liability and indemnify the assured in an unknown proposition 
and that is something this Association, I am sorry to say, cannot 
remedy. Papers are read here that intelligent minds could argue and 
discuss and should be discussed, but they are entirely ignored. They 
are read and then entirely dropped. Now I ask if it does not strike 
you that we ought begin at the beginning, as it were, and take up 
these different subjects at stated meetings and discuss them thor- 
oughly — educate our young men. We have all had to start in and 
learn and we are learning every day of our lives. 

Mr. Swett— I think Mr. Wetzlar has hit the very nail on the head. 
Incompetent men are sent out to take charge of losses, who are 
absolutely without knowledge as to values and it should be dis- 

Mr. De Veuve— I do not quite agree with Mr. Wetzlar in the 
matter of educating young men. He had to make a start himself, 


was once young and inexperienced like many among us who are learn- 
ing something new every day, but the point I make on Mr. Osborn's 
paper is this: the reprehensible practice of permitting a local agent 
to adjust partial losses. I believe the local agent can adjust total 
losses as well as anybody else, because if it is a total loss it will be 
total no matter who adjusts it. I know when I started out. I am 
free to admit, that I was perfectly useless for twelve months, you 
may say I am perfectly useless now in a great many things, but I am 
very willing to learn. As Mr. Wetzlar remarks, if you send out a 
man who is competent to decide in all matters, who is a man well 
fitted to decide the company's liability, and fix all those matters to 
an absolute certainty, where does the young man come in ? It is a 
matter of growth. A young man in the profession as I am. and 
many of the others here are, can only absorb those things by asso- 
ciation with our elders and learn what to do. 

That is not the question. The proposition Mr. Osborn advanced, 
the point he makes, is that practice of entrusting the adjustment of 
partial losses to local agents, and I think it is the source of great loss 
to insurance companies in general. I know recently of a loss that 
occurred where there were two local agents representing companies 
of considerable reputation in this city — the managers are of reputa- 
tion — they insisted upon paying the assured a certain amount of 
money for that loss, for this reason: Notwithstanding he suffered 
certain specific damage, he was at a loss which no company could pos- 
sibly indemnify him for. There was a consequential damage, which 
nothing could repay, therefore in the goodness of their hearts they 
considered it no more than proper that this man should receive from 
the insurance companies what we were wont to call a ' ; New Orleans 
lanier, ' ' little extra. Of course, if we were charitable institutions, 
we would consider that proper, but not being so, the expense is a 
thing to be reduced and we certainly should not allow a man 
,; lanier. ' ? An adjuster of intelligence could settle partial losses for 
the actual amount of money lost, and leave the assured in a satisfied 
frame of mind, and perhaps more so than the local agent. One man 
steps in to the loss and says to him, you have lost $20. we will give 
you thirty, because you are a pretty good fellow, and another one 


pays him for the actual loss sustained, he will say that the latter is a 
business man, and will think that the former was trying to bribe him 
for a small amount of money: therefore, as originally stated, I don't 
believe in entrusting the settlement of partial losses to agents. 

Mr. Watt — I want to take exception to Mr. Wetzlar's position, on 
the question of adjustments. If I understood what he said, and I 
think I did as I listened very carefully, he disapproves the adjust- 
ment of losses by special agents; I was surprised that he received 
applause, and that some of the applause came from special agents. 
I disagree with him in the first place when he says that a young man 
who is capable of going out through the country to inspect and 
decide as to the desirability of risks, as to the value to be placed on 
buildings and contents, is not able to adjust a loss. I would rather 
have a well trained and rounded man in the business than a one-sided 
man. I believe they are of more value to the profession. I believe a 
young man should go out into the country and learn to handle the men 
who are local agents, how to inspect risks, find out the physical hazard 
and how to adjust losses. You will remember that Mr. Sexton and 
Mr. George Grant, the worthy editor of the ;i Knapsack," Mr. 
Famonville, Mr. Tyson, Mr. Tom Grant and others; I think I could 
go on and name perhaps thirty-five or forty of them, men who have 
risen to their present positions through every stage of the business, 
including special agency work, and I think of one or two cases of in- 
dependent adjusters Who have tried the management of companies — 
I know not why they did not continue as managers — but they did 
not. It all depends upon what these young men want to be — inde- 
pendent adjusters or agency or company managers. If he starts in 
to be a bookkeeper he is likely to be a bookeeper all his life, and 
nothing else, but if he starts in to learn the whole business he learns 
how to keep books also. If you just learn how to be an adjuster, 
you will always be an adjuster. 

Mr. Dornin — I want to say a word commendatory of the endorse- 
ment of young men in the profession, something done so handsomely 
by Mr. Watt. I remember some thirty years ago I was sent out by 
Mr. R. H. Magill. I was acting as special agent and was sent to 


adjust my first loss, and I well recollect the trepidation with which 
I went to work. I was commended for it on my return, but a week 
after he called me into the back office and showed me where I might 
have done better. I can see now where I might have saved money 
for my company in my adjustments, but each instance is educational. 
Mr. R. H. Magill at that time was one of the best general agents on 
this Coast. I presume he is now. He was kind and considerate 
with young men. made kindly suggestions as to the method of 
adjustment, etc.. encouraged educational practices. I believe most 
of the managers and agents are endeavoring to educate their staff of 
young men to make them proficient, give them the results of their 
experience, and in that way they are establishing on this Coast a 
corps of brilliant young men who are to follow us. The best papers 
I heard to-day are the emanations from young men of the field — 
local agents as well. It must be borne in mind that it is not alto- 
gether within the power of the general agent to exercise any discre- 
tion as to how a loss may be adjusted. By the way. we seem to be 
switching off from Mr. Osborn's valuable paper. Some of the 
general agents are on commission. Others are salaried men who 
are responsible to their companies for the cost of doing the business. 
We all know the Eastern papers are full of criticisms from time to 
time as to the cost of adjusting, and general agents or managers 
must exercise great care in this. Some of the Eastern head offices 
are more particular as to the cost of adjusting than the amount of 
the loss. If the expense ratio for the year is increased one-half of 
one per cent there are several pages of correspondence received in 
regard to the cause which led to it. while the ratio of losses may 
have increased five per cent and but little is said of it. I believe 
that all of us. most of us. who have large correspondence find men 
in the field who are within easy reach who are trying to make them- 
selves efficient underwriters. They are studious and try to post 
themselves by all possible means. Xow. it is my method to find 
somewhere in the field a man I have confidence in who may represent 
us when our own specials are not within reach or are too busy. It 
is my experience that the local agent, if he is worthy of the position. 
is as tenacious of his company's rights and interests as any outside 
man can possibly be. and I am rather proud of the local agents on 


this Coast. I believe that general agents will agree with me that it 
is difficult to find a more conscientious body of men. I see some old 
friends from Denver here. I think they will endorse what I say. 
During the last six months of the year there was shutting down of 
mills and general tumult caused by the silver agitation. Knowing 
the men as I did throughout Colorado, I felt satisfied that they were 
so thoroughly conscientious that I had no anxiety that they would 
not fulfill their duty and take all the precautions necessary to guard 
against suspicious fires and incendiarism. 

Mr. Grant — I was about to say that I think the point Mr. Wetzlar 
made is a good one in regard to burying up valuable papers instead 
of making the organization what it was intended to be — educational 
for the youngar members. As I understood Mr. Wetzlar to say : 
Send qualified adjusters to adjust losses, but qualify some more 
through the means of this organization. 

Mr. Wetzlar— If you will permit me to take up the time of the 
Association just about two minutes, I desire to state that Mr. Grant 
is absolutely correct in his remarks. I see before me a number of 
young men, some of whom have been in the business for a number 
of years. There is not one of them here to whom at any time I have 
hesitated to give advice, counsel and assistance when such was 
wanted. There has been a great number of times when young men 
have advanced to me ideas which were new, and I have been bene- 
fitted thereby, but Mr. Watt has entirely mistaken my remarks 
when he supposes I am against educating the young men. On the 
contrary, I am in favor of educating them ; but I am not in favor of 
sending them to adjust losses until they are educated. I remember 
some twenty-six or twenty-seven years ago, when I started out in 
this business and was sent to adjust losses as a green hand. I was 
sent out with some adjusters — Mr. R. H. Magill, Mr. H. H. Bigelow, 
Mr. Tom Grant and different members Mr. Dornin has named — to 
act as their clerk and see how these things were done, and my com- 
pany paid those gentlemen their pro rata. I got my education, but 
the company did not experience the loss to any greater extent by 
reason of my inexperience. My friend De Veuve thinks that a local 
agent can always adjust a total loss. That reminds me of an inci- 


.dent. I was sent to adjust a loss in a town where there was a 
general conflagration. The town was nearly burned down, and I was 
representing a number of companies. I was sending home the papers 
as fast as the losses could be adjusted. Those that I sent home were 
all total losses, and I received a despatch from the President of one 
of the companies saying that if the balance of the losses were as 
likely to be total as those sent in already why not draw a check for 
the whole amount ? I answered : "If you have any known process 
by which you can determine a loss to be total without investigation, 
speedily wire. ' ' 

Mr. Faymonville — We are drifting toward specialism. Twenty 
years ago we had physicians who were all-around physicians — pulled 
a tooth or sawed off a leg with equal facility. But what would do 
twenty years ago would not meet the demands of to-day, and we 
must have specialists, must have men who make special study of the 
different branches of the insurance business, and make some par- 
ticular branch their life-study. While I am pleased with the round- 
about young man Mr. Watt has drawn for us, and don't care to 
discourage him, yet I believe the time is coming when we must give 
our entire attention to some particular branch of the business, to the 
exclusion of the others, if we wish to succeed. 

Mr. De Veuve — I don't believe this debate was started for the 
purpose of advertising special adjusters, or independent adjusters. 
I believe in special adjusters all right, but the question is whether 
special agents are competent to adjust losses. The first question was 
whether local agents ought to be entrusted with the adjustment of 
losses. There is no question in my mind that the average old special 
agent to-day is something to the insurance business — the same idea 
as Pat's wife had of the codfish balls. It seems a couple came over 
from the old country and sat down to dinner in a Boston hotel. 
They were not used to hotels and betrayed their ignorance in the 
usual ways. The waiter salaamed up to them to receive the order, 
and Pat took up the bill of fare and ordered a beefsteak and handed 
the bill to his wife. She read beefsteaks, mutton-chops, and so on, 
finally coming to codfish balls. "P'hat's that," said she, "codfish 


balls?" "Ah, go on," says Pat, "sure don't you know that is the 
best part of the fish. " And so it is with the old special agent in the 
insurance business. 

Mr. Gunnison — I don't want to consume time, but I have one 
word to say. Mr. Watt, I think, went a good deal out of the way 
to call up the question of special agents adjusting losses. I think, if 
I understand the reading of Mr. Osborn's paper, he did not refer to 
special agents at all in the paper; he only referred to local agents — 
the employment of local agents in adjusting losses. Mr. Kinne con- 
fined himself to the question of local agents, the employment of local 
agents with adjusters, independent adjusters, or special agents 
acting as adjusters. I do not think anyone on this floor has. any 
objection to special agents acting as adjusters ; I certainly have none 
myself. I would like to inquire of Mr. Watt if after he has rounded 
out and developed his adjuster until he becomes an adjuster, what 
he is going to do with him? So far as special agents and indepen- 
dent adjusters are concerned, I don't think there is an independent 
adjuster in the field to-day that did not start out on the lower 
round of the ladder and work up to the position he holds. So far as 
I am concerned, I commenced in the business at the lower round of 
the ladder and when Mr. Watt was but a mere child. I went through 
all the stages from that of mere solicitor, or from office boy, 
through, except that I have not been President of the company. 
Nearly every one of these adjusters to-day have done the same, and 
I don't believe there is one who will object to the employment of 
special agents as adjusters. But the employment of local agents as 
adjusters is all wrong. Colonel Kinne was exactly right in his 
position. For instance, say we have ten companies on a loss, and 
nine of them employ, as he says, an independent adjuster to go and 
adjust that loss. The tenth one employs a local agent. Once in a 
while the local agent is a very nice man, and a sensible man. and 
when an independent adjuster comes, says: "I won't interfere, and 
will do the best I can to assist you, if you require any assistance: 
but I won't interfere with this adjustment." That local, I say, is a 
sensible man. He acts in justice to his company, but if you get 
a-foul of one who is anxious to show what he can do, he makes it 


very disagreeable for the adjuster and very often causes additional 
expense to the company, in his anxiety to please the assured. 

President Ives — I am glad to see so much interest taken in this 
matter of adjustments. We have not much more time to devote to 
it this afternoon. Perhaps a committee might be appointed to take 
it up the coming year. No doubt my successor will be able to take 
such means as to have them thoroughly discussed. If we can pro- 
ceed to other business now. we have got some little unfinished busi- 
ness which I would like to bring up. In June last year there was a 
Committee on Builders' Contracts empowered to report for a form 
for improving the present one in use. and that committee was con- 
tinued in office to confer with the Builders' Association and see if 
any action could be got from them with reference to adopting a form 
they could recommend. Colonel Kinne was the chairman of that 
committee. I think the Association would like to learn from him 
what action, if any, the Builders' Association took. 

Colonel Kinne — Mr. President, the committee met. and the com- 
mittee was continued as you stated, and conferred with the different 
officers — President and Secretary — of the Builders' Association, and 
they seemed to approve the action and were to call a meetin, 
consider the matter, and what action they took I don't know. That 
is the last I have heard of it. 

President Ives — There is another question which seems to have 
been left unfinished last year at the December meeting. The qi - 
tion arose regarding the non-payment of dues. A committee wai 
appointed — Mr. Wetzlar. Colonel Kinne and Mr. Lowden — to draft 
some form, to be presented at the next annual meeting, with 
reference to the matter. I see the chairman of the commit:- 
here, and can tell us what was done with it. 

Mr. Wetzlar — What committee was that? 

President Ives — The committee to formulate an amendment to the 
constitution which would make it obligatory on members to pay 
their dues, as I remember now. within thirty days from the date of 
the annual meeting, and when notified by the Secretary of the A- 


ciation ; if they were still delinquent at the end of sixty days their 
names were to be arbitrarily dropped from the rolls. 

Mr. Wetzlar — If I have been put on that committee it is the first 
knowledge that I have of it. 

President Ives — You were at that meeting-. Mr. Wetzlar. 

Mr. Wetzlar — I have no recollection of being- on the committee, 
and will simply say that the committee has performed no action. I 
am very sorry to say so. 

Mr. Dornin — Let the chairman report progress. I beg to offer 
the suggestion — 

Mr. Grant — I was appointed on the Library Committee and with 
your permission I will submit these reports: (Reports are read.) 


To the President of the Fire Underwriters' Association of the Paeifle: 

Your committee to whom was referred the report of the Library Com- 
mittee beg to submit the following resolutions for adoption by the Associa- 
tion, viz. : 

Resolved, That an appropriation of $100 be made out of the income of the 
Association for the use of the Library Committee for the coming year. 

Resolved, That from such appropriation the sum of $45.15 be employed in 
the reimbursement to the chairman of the retiring committee for outlays 
made by him in excess of receipts for the past year. 

Resolved, That the recommendation of the Library Committee relating 
to preparation of publications for the 20th anniversary of the Association be 
referred to the incoming committee, with suggestions that the same be 
acted upon by them so far as funds at their disposal may admit, with par- 
ticular reference to preparing a catalogue of the Library and index to the 
Annual Proceedings. That the Association appreciates the value to it of 
an appropriate compendium of its history for twenty years ending with its 
anniversary in 1896, as outlined by the committee, and recommend their 
earnest endeavors for its preparation, so far as any means can be developed 
for the purpose. 

Resolved, That the thanks of the Association be extended to the Coast 
Review, the Pacific Underwriter, the Insurance Monitor, the Weekly 
Underwriter and the Standard for the free furnishing of their respective 


periodicals to the library of the Association ; also to Mr. P. H. Porter for 
valuable services rendered for the benefit of the Library. 

Respectfully submitted, 






To the President of the Fire Underwriters' Association of the Pacific: 

Your committee to whom was referred the report of the Executive 
Committee, beg to submit the following resolutions for adoption by the 
Association, viz : 

Resolved, That the urgent call of the Executive Committee in its report 
upon members for prompt payment of dues is heartily approved, and that 
this Association as a body appreciate the importance of such action, and 
urge upon its individual membership the prompt payment of their annual 
dues not later than sixty days after any annual meeting. 

Resolved, That this Association appreciating that many of its members 
are prevented by circumstances from intimate or frequent association with 
it, the suggestion of the Executive Committee of making a charge of fifty 
cents to each member of the Association for a copy of the Annual Proceed- 
ings is deemed inexpedient, but it is 

Resolved, That one copy of the Annual Proceedings shall be delivered 
without charge to each active member, and that other copies shall be 
charged for at the rate of $i each ; also that each member be requested to 
state to the Secretary in advance of its publication the number of extra 
copies he may desire, so that, including a reservation of five copies for the 
use of the Association, and such as may be required for exchange with 
kindred associations or libraries, no more copies may be published than 

Respectfully submitted, 





Mr. Wetzlar — I move the report of the committee be accepted 
placed on file and the recommendations be adopted. 

Mr. Watt — Does that bind us to the recommendations ? 
President Ives — Yes. 


Mr. Watt — If it is binding, I don't want to adopt them, but if it 
is not, why all right. If it is, I want to say a word. I don't think 
we have copies enough, for the reason that some members of the 
Association like to keep records of the Association, and I don't 
regard the number mentioned as sufficient. The next point is the 
price. I would like to have it fixed at fifty cents instead of a dollar, 
and the number of copies retained, to be ten. 

Mr. Grant — I would say that the committee put the price at a 
dollar for the reason that we need all the funds possible, and fifty 
cents will not pay for the printing of the copies: but as to the number 
of copies to be kept on hand, whether it be five or ten, is immaterial. 

Mr. Kinne — I move that the number five be amended to twenty- 
five. I think with Mr. Watt five is not sufficient. 

President Ives — You put that as an amendment to Mr. Watt's 
motion ? 

Colonel Kinne — Yes. 

Mr. Watt — I accept that. 

President Ives — You hear the motion. It has been seconded that 
the committee's report be changed, as I understand, to read twenty- 
five extra copies, to be retained in the Association. 

Colonel Kinne — Question ? 

Mr. Wetzlar — I move that the price be placed at fifty cents for 
the extra copies. 

Mr. Dornin — I presume the committee has taken that matter into 

Mr. Kinne — What do they cost apiece? 

Mr. Grant — The Financial Secretary has the statement. 

Mr. Driffield — I think the number was four hundred and the cost 
a little over a dollar apiece. 

Mr. Grant — The committee reported that they spent $415 and 
received but the paltry sum of $17 on account of sales, and that is 


what prompted the committee to say that the price should be a 
dollar, for the reason that we don't want to run into debt. 

Mr. Driffield — I don't think, Mr. President, there will be any need 
for more than 250 copies. We have a very great stock of those 
previous reports which have not been called for. We have 185 
members. Add to that the twenty-five additional talked of. will 
make 210, and allow about forty, which should be the outside num- 
ber which we can rely upon to be sold, brings it to 250. 

President Ives — The question is in regard to making the price fifty 
cents instead of a dollar. 

Mr. Dornin — I move as an amendment that the matter be left in 
the hands of a committee, and their action be final. 

Mr. Wetzlar — If I understand Mr. Dornin that this matter be left 
with the Executive Committee, I second the motion. I believe the 
Executive Committee of this organization, when the time arrives for 
the printing of this annual report, is best capable of judging whether 
to charge a dollar, or two dollars, or fifty cents. I second the 

President Ives — The question before the organization is that the 
Executive Committee have entire charge with reference to the pub- 
lication of the proceedings. 

Colonel Kinne — Not to exceed a dollar charge. 

President Ives — Not to exceed one dollar: all those in favor say 


Colonel Kinne — I now move that the report of the committee as 

amended, be adopted. 

(Carried. ) 

Mr. Wetzlar — The Building Committee has made a report and 
there has been no action taken upon it. 

President Ives — The Building Committee came up last June and 
was accepted. They were continued in office. 


Colonel Kinne — They were notified at the time that they would 
come up here, and be part of the proceedings and the report be 
printed in the proceedings. If that is not so, I move that the report 
be printed. 

President Ives — It is moved and seconded that the Building Com- 
mittee's report as reported last June be adopted and printed in the 
proceedings as the voice of this Association. Those in favor say 



Secretary Osborn — I have been requested by two members to 
present to the Association an old policy, issued ninety-eight years 
ago. It is that of the Mutual Insurance Society of Richmond, 
Virginia, and is presented with the compliments of Mr. De Veuve 
and Mr. Smalley. 

Mr. Kinne — I move it be accepted with thanks, and that the 
Secretary be instructed to have a suitable frame made and hang it 
up in our room. 

Mr. De Veuve — It is through the courtesy of Mr. B. D. Smalley 
that the Association received this policy, and, therefore, I don't 
claim any of the glory. 

Mr. Smalley — I don't think he is entitled to any. I wouldn't 
have given the policy to him, only I wanted him to write out a nice 
speech and present it to the Association in good form ; but he has 
not done it, and I don't think he is entitled to any of the credit. 

Secretary Osborn — Last week Captain Magill informed me that 
he had quite a number of books, principally statistical works, bound 
volumes, that he wished to present to us, and I accepted them for 
the Association. 

Mr. Faymonville — I move that the Secretary convey the thanks 
of the Association to the Captain. 


President Ives — I think that is customary, and if there is no 
objection it is so ordered. The next thing is the amendments offered 


by Mr. Watt at the last meeting. He gave notice of an amendment. 
Will the Secretary please read the proposed amendment? 

(Secretary reads the amendment.) 


Resolved, To alter or amend the Constitution, notice must be given at 
a regular meeting, and the Secretary shall have such notice to alter or 
amend, together with a copy of such alteration or amendment, printed and 
sent to each member. At the next annual meeting succeeding such notice, 
on a two-thirds vote of all members present, said alteration or amendment 
may be adopted. 

Colonel Kinne — I move adoption of amendment offered by Mr. 
Watt. It has been talked over a good deal by the members, and 
would save a vast deal of trouble. A two-thirds vote of the mem- 
bers present should be sufficient and the change would do away with 
the bothersome plan of having proxies. 

Mr. Grant — I fail to see how you can alter or amend the consti- 
tution by two-thirds vote of the members present now any more than 
you could a year ago. I simply want to make a little personal 
explanation, if it is not out of order. It is in relation to a ruling of 
the Chair at the last annual meeting. I had the honor to be your 
President, but was not able to meet with you frequently during the 
year. There were some thirty-five members present at that meeting. 
I presented what you might be pleased to call a semi-annual address, 
and in it referred to the condition of our monthly meetings, the 
paucity of attendance which has become traditional, and suggested 
that a change be made to quarterly meetings instead of monthly 
meetings. At these quarterly meetings special efforts to be made. 
so that the meetings could be developed in numbers and developed 
in interest. The semi-annual address was objected to in matter and 
manner by my friend Kinne. It was an innovation, and he didn't 
care to have any semi-annual address. But it seemed to me that 
the matter should have attention, and I presented it in that way. 
It was referred to a committee, and the committee prepared as their 
report some amendments to the constitution changing the order of 
meeting to quarterly, changing the manner of election of meml 


and some other alterations to the constitution. Notice was duly 
given at the monthly meeting- preceding* the annual meeting. When 
the committee discussed it at the annual meeting the hour was late. 
It was the sense of the meeting, apparently, that the amendments 
should prevail : in fact, we had proceeded as far as possible in the 
matter and adopted the amendment changing the order of meetings 
to quarterly meetings. As the hour was getting late and a good 
many had to get away, had to brush up their dress suits and get 
ready for dinner, and there were only a few left, it was then sug- 
gested that we proceed irregularly, because it required two-thirds 
vote of all the members. 

Mr. Kinne — A majority. 

Mr. Grant — Majority, I mean, and a ruling was asked for by the 
Chair, and I ruled to amend by a majority of the members present, 
or words to that effect, because of the exigency and because of the 
unanimity of opinion in regard to the case. In fact, my friend Col. 
Kinne had already expressed himself for the amendment, but an 
appeal was taken from the Chair's ruling, but the -ruling was sus- 
tained by the Association. It seems to me now that it became an 
act of the Association and the amendments were carried. I simply 
rise to make a personal explanation, and think that this will settle 
the business, because of the exigency. 

Mr. Kinne — I would like to say that the matter was never deemed 
by those who were in the minority at that time — there were only 
thirty-five or seven present — that an illegal act could be made legal 
by performing an illegal act. The matter was brought up, and con- 
sidered by all present, that there should be an effort made to obtain 
proxies, and do the thing right, and to-day we have enough present, 
or by proxy, to have a majority of the members of this Association 
act under the rules, as they were legally adopted, say twenty years 
ago, and it wouldn't take any time at all to have this matter settled. 
It is perfectly indifferent to me whether they have quarterly meet- 
ings or monthly meetings, or whether you vote for applicants by the 
committee of fifteen or not. I am willing to leave the room and let 
you settle it as you please. I don 't believe that anything that has 


been done illegally should be right. Several members have proxies 
and it seems to me that we can in this way act and it will satisfy 
everybody, and make legal anything you do in the future. My 
motion is on the adoption of the amendment offered by Mr. Watt. 

President Ives — It is moved and seconded that Mr. Watt's motion 
be acted on. to alter or amend the constitution. We have had a 
great deal of trouble during the last year in regard to the election 
of members, and if the constitution is amended in this way. it will 
be better. 

Mr. Watt — Mr. Driffield wishes to insert the words • • or by proxy. 
I don't think it is necessary, but will consent. 

Colonel Kinne — ,k By proxy." We are getting right back to the 
same old thing. 

Mr. Watt — Oh. I don't think so. 

Colonel Kinne — That matter was settled once, and it was to avoid 
that very idea of anyone coming in here with proxies and voting 
them that the amendment was made. 

Mr. Watt — Since it does not meet with common consent. I with- 
draw it. 

Mr. Grant — With reference to the passing of this amendment, we 
have still to wait another year, before we can pass upon the matter 
of quarterly meetings. 

Mr. Kinne — An amendment can always be offered. 

Mr. Grant — I would like to have the proposed amendments of last 
year adopted now. 

President Ives — That can be done very soon: all in favor of Mr. 
Watt's motion — 

Mr. Kinne — That is not the thing. We shall act upon it. Here 
are the proxies. There are seventy-six proxies here. Some few are 
present; it will make over a hundred. We only require ninety- 
three. We will file the proxies. 


Mr. Paymonville — I move that Colonel Kinne vote the proxies. 
Somebody has got to vote the proxies — without calling the roll. 
Colonel Kinne — I move the adoption of the amendment. 

Mr. De Veuve — Before the meeting proceeds with the election of 
officers, and the reading of the "Knapsack " — I don't wish to put 
myself on record as a constitutional kicker, but this matter of mort- 
gage clause came up this morning. A committee of five was ap- 
pointed, and I now move that the committee be instructed to report 
on the matter of mortgage clauses at the next meeting of this Asso- 

Colonel Kinne — I second the motion. 

Mr. Lowden — I wish to say if that is carried, I shall resign from 
the committee. It is impossible for the committee to get material 
together, and to be restricted to a certain time ; it is very much 
against my wish. 

Colonel Kinne — Whether it is a quarterly or a monthly meeting, 
the committee can suit themselves about the reporting ; they can re- 
port progress. Question. 

President Ives — It is moved and seconded that the committee ap- 
pointed on mortgage clause shall report at the next meeting of this 

(Carried. ) 

Mr. Gunnison — I believe you didn't declare in favor of the vote at 

President Ives — I did. I declared that the " ayes" had it. 

Mr. Grant — I wish to make a motion to the effect that the amend- 
ments proposed at the last annual meeting, and which you have a 
copy of, be now adopted by this Association. 

Mr. Watt — I second the motion. 

Colonel Kinne — Question. 

President Ives — It is moved and seconded that the amendments 
be adopted, whether legal or otherwise, by this Association. Will 
Mr. Grant state his motion so we can have it straight ? 


Mr. Grant — The motion is that the amendments that were 
presented at the annual meeting last year concerning the changing 
of the meetings to quarterly meetings instead of monthly meetings. 
the election of members, and other matters in relation to the publi- 
cation of the proceedings, be adopted now by the Association. 

Mr. De Veuve— Second the motion. Mr. Chairman. 

Mr. Wetzlar — I rise to a point of order. This is an adjourned 
meeting : that is. adjourned from month to month. Can we vote 
upon that proposition now? 

Mr. Gunnison — I wish to inquire what those amendments were so 
we can vote on the amendments. If it takes in that fifteen-star- 
chamber voting on members I don't believe in it. I want to know 
whether it does or not. 

President Ives — It is moved and seconded that Mr. Grant's 
motion as read 

Mr. Grant — Proposed amendments submitted at the last annual 
meeting be adopted by the Association at this meeting. 

Mr. Wetzlar — I move that Colonel Kinne cast the proxies in 

Mr. Grant — We don't need it now. 

President Ives — Those in favor say "aye." Contrary "no." 

Mr. Gunnison — I voted "no." 

President Ives — The "ayes" have it. We shall now proceed to 
the election of officers. 

Mr. Faymonville — I take pleasure in placing in nomination Mr. 
Rolla V. Watt. We all know him and know what a good President 
he will make. I take great pleasure in naming him for the 

Mr. Wetzlar — I move that the nominations be now closed and let 
the Secretary be instructed to cast the ballots for Mr. Watt. 

Mr. Watt was declared unanimously elected. 

Colonel Kinne — I move that he prepare a speech for the banquet 
this evening. 


Mr. De Veuve — I would like to place in nomination for Vice- 
President a gentleman who has given us his attention and services — 
has always been a valuable member of this Association. I therefore 
take pleasure in nominating" Mr. Herbert J. Folger of Portland, 

Mr. Swett — I place in nomination Mr. Driffield. 

Mr. Kinne — I move the nominations for Vice-President be closed. 

President Ives — Mr. Folger and Mr. Driffield are the candidates 
for the vice-presidency. I will appoint for tellers Mr. De Veuve and 
Mr. Swett. 

Mr. Swett — There were forty-four votes cast, Mr. Chairman, of 
which Mr. Folger received 13 and Mr. Driffield 31. 

President Ives — I declare Mr. Driffield elected Vice-President. 
Nominations are now in order for Secretary. 

Colonel Kinne — I desire to place in nomination for the position of 
Secretary, Mr. Osborn. 

Mr. Wetzlar — I move the nominations now close and the Presi- 
dent cast the ballot for Secretary. All in favor say "aye." 
(Carried. ) 

Mr. George Grant — I hope the customary amount will be passed 
from the treasury to Mr. Osborn. 

President Ives — It is moved and seconded that the usual annual 
remuneration be allowed the Secretary. All those in favor say 
"aye." Contrary "no. " So ordered. 

Mr. Watt — Mr. Chairman, in view of the fact that it is now 
twenty-five minutes to five, and a large number have been compelled 
to leave the room, I move to test the sense of the meeting, though I 
do not want to urge it, but just to see what you think, that Mr. 
Grant be asked to read the "Knapsack " at the banquet to-night. 

Colonel Kinne — Don't we have to vote for an Executive Com- 
mittee ? 

Mr. Watt — My motion is, Mr. Chairman, that Mr. Grant be 
asked to read the "Knapsack " at the banquet. 


Mr. De Veuve — I believe Mr. Watt's motion is out of order. I 
move that the meeting adjourn to half past six. and that Mr. Grant 
be permitted to read the " Knapsack. " 

Mr. Watt — No, not permitted : requested. 

Mr. Grant — We got so far as the Executive Committee. I desire 
to put in nomination 

Mr. Watt — I rise to a point of order. I would like to know if my 
motion has been declared out of order. 

President Ives — I think it is in order, under the circumstances. 

It is moved and seconded 

Mr. Gunnison — It would not be under ordinary circumstances. 
how can it be now? 

President Ives — I am trying to get at the desires of the 

Mr. Gunnison — This "Knapsack" won't take more than thirty 
minutes to read. I don't believe Mr. Grant would receive the proper 
attention if it were read at the banquet. Besides. I know eight or 
ten that will not be present at the banquet. I guess they can wait 
here till half past five and listen to that paper. That is about all 
we have got to do. 

President Ives — It is moved and seconded that Mr. Grant be 
requested to read his paper at the banquet instead of now. All those 
in favor say "aye." Contrary ''no." The motion is lost. 

Mr. Grant — I want to put in nomination as one of the Executive 
Committee, and its chairman, a gentleman who has done a great 
deal for the Association, and who will do a great deal more, and 
will be very efficient in the position — Mr. Herbert Folger of Port- 
land. I didn't know that his name was to come up for Vice-Presi- 
dent. He is a very able and efficient man, and as chairman of the 
Executive Committee he would do much good. 

Colonel Kinne — I would like to ask the Secretary to read the 
names of those on the Executive Committee. 

President Ives — I can give you the information (giving the names 
to Colonel Kinne). 


Mr. Wetzlar — I nominate as member of the Executive Committee 
a young gentleman who will undoubtedly add to the strength of that 
committee, and who is a good, earnest, hardworking member of the 
Association. I mean Mr. Franz Jacoby. 

Mr. Lowden — I nominate Mr. James H. De Veuve. 

Mr. Gunnison — I move that the Secretary be authorized to cast 
the ballot for the Association. 

Secretary Osborn — I cast the ballot for Messrs. Folger, Jacoby 
and De Veuve. 

President Ives — The same are declared elected the Executive 
Committee. The committee of fifteen members 

Colonel Kinne — I move the selection of fifteen members be left to 
the Executive Committee and the Board of Officers, acting jointly, 
and we empower them to cast the ballot for the fifteen. 

Mr. Grant — I move to amend, and suggest the naming of the 
previously elected fifteen of last year. My amendment is that the 
same fifteen be nominated as Election Committee. 

Colonel Kinne — I decline to accept that as an amendment to my 
motion. My idea is to have a new Election Committee, and the 
Board can appoint the same ones or others as they see fit. 

Mr. Grant — The method by which they shall be elected shall be 
by ballot. 

Colonel Kinne — I move to leave it to the Executive Committee 
and the Board. 

Mr. Grant — I move the Secretary be authorized to cast the ballot 
for the fifteen members nominated as a committee at the last annual 

Colonel Kinne — There are some on that committee who do not 
serve, do not have the time, and a new Board of Officers can make 
selections of men who will serve. I ask for the reading of the names. 

(The Secretary reads the names. ) 

Mr. Dornin — Question, Mr. Chairman. 

Colonel Kinne — I desire to have some other name placed there 
instead of my own. I decline to serve. 


Mr. Watt — I do hope we will not waste any more time. We are 
just killing- time here for nothing. 

Mr. Osborn — The name of Mr. Dornin is suggested in place of 
Mr. Kinne. 

President Ives — The Secretary will cast the ballot for Mr. Dornin. 
Mr. Osborn — The following are duly elected to serve as the Com- 
mittee on Election : 

L. B. Edwards, Geo. D. Dornin, 

Edward Mies, W. H. Lowden, 

George F. Ashton, J. W. G. Cofran, 

A. J. Wetzlar, E. W. Carpenter, 
R. W. Osborn, Charles A. Laton. 

B. Faymonville. Rolla V. Watt, 
Henry T. Fennel, George F. Grant. 
George W. Spencer, 

Mr. George Grant then proceeded to read the ''Knapsack. ,? 


Vol. XVIII. February 21, 1894. No. 1. 

Twenty-five years ago a man working in an insurance office was taught 
to believe that the first requisite for making money in his business was an 
adequate rate. The subject of rates was the theme for private lectures and 
public papers. So imbued did he become with this idea of rates, that the 
first printed speech containing a doubt of this theory gave him a shock of 
disapproval, and the author was regarded in the light of an apostate. It is 
useless now to speculate on the motive of the author. He may have been a 
crank out of a job, or one ambitious for notorietv as an advanced thinker. 

The seed he dropped took root and bore fruit. Year after year the doubt 
was nursed, until at last it lost a doubt's identity. Since then, every 
ingenious theory imaginable has been presented in an endeavor to prove 
why the net profit should not depend upon the rate at which policies are 

When the Compact office was born, it came for the purpose of controlling 
the morals of the business. The Compact manager was the keeper of the 
insurance conscience, and like a faithful monitor stood watch over the just 
and unjust, holding all to a strict account and showing favoritism to 


In an unguarded moment the manager, listening to the logical siren, 
reduced a rate on apparently technical grounds, but before he could, meta- 
phorically speaking, say Jack Robinson, he had reduced the rate on the 
whole class to which this risk belonged; and this was done, too, under 
pressure of the "Governing Board" and to the great satisfaction of every 
competing solicitor and the calm delight of the policyholder. 

Then some one advanced the idea that if rates were only reduced all 
around it would prevent the disruption of the Compact, because it would 
leave the rate-cutter nothing in particular to cut from. For look you, it 
seems to be better to roll up a large volume of business, and thus demon- 
strate superiority over one's adversary, than to stand guard over the 

Whatever element of chance there may happen to be in the business thus 
becomes the foremost idol of the hour. 

Fortunately for the Pacific Coast we have been too old fashioned to tread 
rapidly in the footsteps of our Eastern brothers, but we are tending that 
way. Year after year the wail of "no profit," is heard from over beyond 
the Rocky mountains. Year after year the conflagration hazard increases. 

I leave to others the analysis of the fire waste, but to you members of 
the Association I recommend the subject of adequate rates on the Pacific 

One constant menace to the rate is the "patent appliance." Sometimes 
it comes in the guise of an improved fire alarm ; again as an extinguisher ; 
but whatever form it takes it is accompanied by no end of printed proof of 
superiority, and a talking agent before whom logic and reason are expected 
to fade away, and reduction of rates to then and there obtain. If this were 
all it would be better; but hardly have we become accustomed to the 
reduced rate, when an able talker, with more pamphlets, nails us down, 
demanding a further reduction because of an improvement in the patent. 

The older one grows and the more experience one gets in the world's 
affairs, the more he learns to know that persistent effort will accomplish 
almost anything. 

If a local agent sets his mind on the reduction of a certain rate he will 
get it. It may take time, but he will get it. And as one good turn deserves 
another, other agents w^ill get reductions on similar risks, and get them the 
more easily because of the precedent established. 

There never was a better time than now to agitate the subject of ade- 
quate rates. We have just left behind us a hard year. All have not 
suffered alike — the rule is proven by the exception. Before us we face we 
know not what. But, associates and friends, if experience is worth the 
lives worn out to gain it, why not accept the advantage which costs us 
nothing ? 

Let us return, as nearly as possible, to the theory which controlled men 
in the insurance business twenty-five years ago. Let us return to adequate 

GEO. F. GRANT, Editor. 



Bees, of course, come under the head of "special hazards" ; at least I've 
always found them specially hazardous. "Hives," too, I'm told, are bad, 
but I can't speak from personal knowledge, as I never had them. 

The specially hazardous feature of the bee is his fiery nature; hence, 
hives containing rival swarms should be charged for as exposures to each 
other. Good underwriting w T ould demand that a specific amount be placed 
upon each bee ; or a warranty that, in case of loss, no bee should be valued 
to exceed $ . . . , etc., etc. There should be proviso that no bee is covered 
under the policy while straying off the premises of the assured, which 
would be defined by metes and bounds (or, as the bee does not hound, by 
metes and flights. It should be understood that the "metes" does not refer 
to the meets between two or more rival swarms, or to any meat human or 
other kind, into wmich the bees may insert their stings.) 

Specific amount should be named on the "queen" bee, and she should 
be insured by name, so that in case she is fired by the hive (company not 
liable for such firing) the new and substituted queen could not be foisted 
upon the innocent adjuster as the original simon pure queen of royal descent 
covered by the policy. Nor will the company permit any fictitious value to 
be placed on such queen. Queens are plenty and supply greater than 
demand. (See Hawaiian Islands.) 

Come to think over it, I'm not sure but that hees should be rated as 
factories — honey factories with or without "steam power." (All I've 
handled I'm sure have steam power, or at least a furnace in the rear.) With 
these hints you can't go astray. 

An underwriting friend, looking over my shoulder, suggests that it 
should be specially mentioned in the policy that the female bees are not 
covered by the policy, as the male bees are supposed to attend to that 

Same ruling may apply to the queen. Loss on "stings" should be men- 
tioned in detail, that is in de tail of de bee. (See?) 

Observe the busy agent 

Improve each shining minute, 
And gather premiums all the day. 

In fact, he's strictly "in it." 


The Colorado specials, as well as accountants, who have a vivid recollec- 
tion of J B 's hieroglyphics, will be pleased to learn why his agency 

was popular and why he controlled so much good business. The reason, as 

given by one of his clients, was, that under one of J B 's policies one 

could recover for any property burned anywhere, as no adjuster could prove 
by the written portion of the policy what property was, or what property 

was not, intended to be covered. 




A certain California woman decided to "make her way," and undertook 
the book line to do it. She became a canvasser for a very salable work, and 
made great success. The story is told of her, that while going through the 
San Joaquin valley, recently, she was riding by an open window. Just 
before reaching the spot in question, a hunter had shot a goose. The ball 
passed through the goose, penetrated a tree two feet thick, and just in time 
reached the train as it was passing by. It struck her on the cheek bone, 
bounded back, and killed a horse grazing in a pasture near by. The moral 
is a good one, and the story only tends to show what can be accomplished 
through a spirit of determination. 

But even this lady's marked development of nerve is outdistanced in a 
case where a general agent recently received a letter from a local of another 
company, in which he begged to announce that he was sorry to return 

Mr. 's policy for cancellation. The premium was $360; and his letter 

read: "Please cancel the same. Return to me his notes, also a bill for the 
earned premium ; then kindly send me the application and a copy of the 
diagram of this property. Thanking you very cordially in advance for your 
attention to this, believe me to remain." 


Little Jack Horner sat in the corner 
Thinking if profits were stringent ; 

He called in his forces to foot up his losses. 
Good-bye to Jack Horner's contingent. 


A lady, writing from Tacoma to a general manager here, complains that 
she was insured in the Tacoma Insurance Company of Tacoma, Washington. 
Says that she went into this because she thought it was controlled by good 
men, and she got a little lower rate, but winds up her letter by stating that 
hereafter she will not insure in sound companies. 


He had just been appointed local agent, and the special had urged him to 
send in a risk, so as to show the company that he meant business. A few 
days thereafter an application reached the manager for $200, "on a well 
twenty-five feet deep, $75 on contents." The agent said that he did not 
know how to rate this, but thought 2 per cent, per annum ought to be suffi- 
cient, making the further inquiry if "the contents will rate higher." 



Have you seen him ! Well, in description he stands about six feet, of 
figure in proportion, and with large, round, hazel eyes, an irregular mous- 
tache, wears a pompadour and has a laugh to enchant the Indians. He is a 
good fellow, bright, full of life and has devoted many years to insurance, but 
his adjustments were not always of the highest standard. His company 
resolved to try him again, and the previous criticism still lurked in his 
memory. He resolved to make his reputation. He thought that to create a 
salvage was the pinnacle of fame, and in view of what had been said to him 
before, he determined to rectify the errors of the past. 

The loss occurred in a private stable in a Washington town. Apart from 
the building, which was insured in another company, there were many 
things of a personal character which his company had covered under its pol- 
icy. ** |i 50 on horses, not over $100 on each." There were items of hay. a 
buggy and some harness. The adjustment proceeded without interruption 
and without salvage, until he reached the item of horses. The man lost one 
horse and saved one. Here was the opportunity of his life : the dream of 
fame was about to be realized. He would noAv send a proof to the home 
office that would defy criticism and would prompt a letter from the manager 
couched in encomiums of the most glowing character. 

Said the adjuster to the assured : 

" You saved one horse, did you :" 

"I did." 

"What was the value of that horse, may I ask?" and drew himself back 
with an air of importance that can only be appreciated when seen. 

"One hundred and twenty-five dollars I think a fair estimate of its 

"Then you consider that you saved one horse worth ^125. do you'" 

u Ido." 

"If such be the case your loss then is .S25. for we deduct the saved 
property and pay a loss on the difference. Your insurance was 8150, you 
saved 8125, that leaves $25 to pay you.'* 

The assured was spell-bound, but gathering himself together respon- 
ded : 

"But the policy says that the limit on horses shall be *ioo." 

"O no," responded the adjuster, "it says they shall not pay over *ioo. 

The assured looked puzzled, and then said he presumed that was right 
and according to the contract. 


This reminds me of a story told of a manager of an Iowa company, whose 
son was just budding forth as an insurance man. He walked into the office 
of his father* s company one day, and said that he wished to discharge Phil. 
Jones and save that $200 a month, because he could adjust the losses jusl 
well. The father was somewhat skeptical, but resolved to test the son's 
ability and send hinrout with Mr. Jones to adjust the next loss. 


It occurred a few days thereafter. This son, with the adjuster, visited 
the scene of the fire, and upon inquiry, the adjuster found that the policy 
had been voided by other insurance without permission, by the execution of 
a mortgage, by the erection of exposures of a hazardous character, and by a 
change of title. He consequently took the policy up and returned to the 
office. The son said he knew very well that adjusting was easy, and that 
after this he would attend to all those things himself. " I may," he added, 
" get the devil licked out of me, but I will guarantee to bring back a few 
policies any how." 


A bright young special climbed on the veteran's knee, 
Begged for a story : "Do tell to me, 
Why are you sighing, why do you groan, 
Have you no hope left, why that deep moan ?" 
1 1 once was cheerful, years, years ago, 
What, boy, has changed me, you will soon know ; 
List to the story, and do not tire, 
I lost my faith in man, 
After the fire." 

After the blaze is over, 
After the smoke is away, 
After the ashes are sifted, 
After we've all had to pay, 
Many a heart is aching, 
As the message goes by wire, 
Many contingents are scattered, 
After the fire. 

k Once, in Montana, traveling up and down, 
I stopped at Butte — a rather rapid town ; 
An expert was with me — some call him ' Bill ' ; 
He and I together soon had our fill. 
There was a dry good stock ; 
There was a liar ; 
There was a smoke damage, 
After the fire." 

After the flames are over, 
After the hose has burst, 
After the claim has swollen, 
After we all have cursed, 
Then the figures are twisted, 
Till we are in the mire — 
Seventy thousand they wanted ! 
After the fire. 


" Since then I've lost my faith. 
Do you wonder why \ 
The loss was not five thousand. 
So said Bill and I ; 
Every rusty piece of goods 
That couldn't find a buyer. 
Was put in as a total loss, 
After the fire." 

After the fire is over. 
After the proofs are made, 
After appraisement is ended, 
After the damage is laid : 
O, how companies suffer. 
And how adjusters tire, 
Of paying unholy loss claims, 
After the fire. 


Jan. 8th, 1894. 

Enclosed is your policy No. 123456, George A. Rodenuch. Return premium 

We ought to have sent this a little sooner, but were delayed. 

The company has made a pretty good thing out of this policy. 

Rodenuch mailed it Oct. 7th, 1893, an( ^ addressed it to the " Standard 
Fire Insurance Co. of the State of New York,'' which legend (or something 
approximately near it), you will see appears on the top of your policy. 
Naturally it went astray and after many moons of wandering came back to 
me from " that bourne " whence no letters (as a rule) return — to wit. the 
dead letter office. Hence the profit to the company. 

' ' I want to be an expert, 
And with the experts stand, 
With my forehead full of figures, 
And a ledger in my hand : 
And when I've totaled up a loss. 
With much of mental strain, 
Someone will coolly rub it out 
And get it awry again." 

The following quotation from Kingsley has been suggested as appropriate 
for the " proofs of loss " of the Merced Woolen Mills : 
• • So go the works of man, 
Back to their earth again : 
Ancient and holy things 
Fade like a dream." 



The old year is past and its duties are done ; 

And now in my corner I sit in the sun, 

And dream of the days when out on the road 

I thought that I carried a wearying load — 

When I wrestled with agents to get in our coin, 

And ate as I could, whether chucksteak or loin. 

Still, my burdens seem hard, though no longer I roam ; 

But I'll lay them all down 






They are coming from near ; they are coming from far, 

And are sure to ride in on the best palace car. 

There's a smile on each lip and a flash in each eye, 

As if none among them could ever say die. 

They tone up the office with cheer and with hope, 

And talk in as certain a way as the Pope. 

Their knowledge is gleaned from no musty old tome, 

And we all learn more 






And I hope, when a few more years have rolled by, 
And I've solved the grim problem that all must try — 
When the fever of living has burned out at last, 
And my memory is but a dim dream of the past — 
That perhaps in eternity's bright sunrise — 
In the crystal depths of Paradise — 
I shall see reflected in Heaven's clear dome 
The shades of the specials 





P. S. — I'm a little uncertain about the general agents. 



The following letter was received at the office of a general agent in this 
city recently, and which we consider is worth while being filed with the 
4 4 Knapsack : ' ' 

San Francisco, Feb. 15, 1894. 
Mr, Badman, General Agent: 

Dear Sir :— In reply to your favor of the 16th will say, that we will do 
our best to send you some good business in the near future, in fact the busi- 
ness has been awfully dull for some time on account of the money market. 
Parties who would like to insure have not got the ready cash to pay the 
premiums. Now, as to the policy of Mrs. Lulu, we are sorry to record the 
death of said party last evening at 11 o'clock w^ith heart trouble. In the 
midst of life we are in death, and as we pass through the dark valley of 
death, we hear but the flutter of an angel's wings. 
Yours very truly, 

I happen to know the party who signed this letter, and for ten years he 
has enjoyed the reputation of being an " all round " terror. 



In December last I was in Denver, the prettiest city of its size in the 
United States, and one having a much better climate than San Francisco. 

During my stay there Henry J. Lufkin, our agent at Wagon Wheel Gap, 
Colo., came to town to spend some of his commissions, and, incidentally, 
called on me. 

Mr. Lufkin is one of those genial, whole-souled gentlemen indigenous to 
Colorado ; is popularly called "Hank," and is very fond of a practical joke. 

After lunch one day Lufkin and I were taking a stroll through town and 
chanced to pass the Cumberland building on Stout street, on the first floor 
of which is the "Woman's Exchange," so called, consisting of a restaurant 
and a supply of fancy articles, embroidered penwipers, tidies, lamp mats, 
canned fruits, cocoanut cake, custard pies and other feminine products, all 
on sale for the benefit of their makers. 

"Hank" gazed on the numerous signs on the outside of the building, 
setting forth in large letters the name of the association, "Woman's 
Exchange," and finally burst into laughter and said : "When I get home 
I'm going to spring a joke on a verdant friend of mine that I believe will 
prove a good one. If you get a letter from one James B. Ferguson referring 
to the 'Woman's Exchange' you will understand what prompted it." 

A week later I received the following : 


"Wagon Wheel Gap, Colo., December 13, 1893. 
"Honored Sir : Billy has just got back from Denver and tells me there's 
a -Woman's Exchange' in your town, where one can exchange his wife for 
another woman, and I want to know if I can trade my wife, and how much 
it costs to do it. 

"I have a wife, 31 years old, a blonde, good looker, good worker, and can 
play 'After the Ball' on the piano ; but the altitude is too high for her, and, 
besides, this town is too slow for one of her gait. She wants to fly high, 
and if I can swap her off for some good girl about 18 years old I would like 
to do it, and my wife would like the scheme herself. 

"If you can send a brunette that would like to come here and take her 
place I'll pay her expenses and introduce her to the best society and make 
her life one of refined pleasure. 

"Send me her photograph, and if it suits me I will go down and arrange 
for her legal transfer. 

"Please answer by return mail. 


"James B. Fbbguson. 

"P. S. — Maybe Bill is lying to me, and if so, let me know, and I will fix 
him so he will lie under the daisies before spring." 

I was afraid to reply, and to this day don't know whether Mr. Ferguson 
succeeded in making the desired trade. 


A special agent, while in Utah recently, had occasion to adjust a loss on 
a barn and the contents, including some horses, the latter being insured for 
•Si 00 per head, some three years previous. Owing to the considerable fall in 
the value of live stock, the adjuster made an offer to the assured of $40 
per head. After some little controversy, the figures were accepted and the 
adjustment closed. The next day, returning to Salt Lake, the special in 
question observed a notice in the daily paper to the effect that an auction 
sale of horses would take place on the following day. To acquaint himself 
with the relative market value of these animals, he decided to attend the 
sale. He did so, and was surprised and even chagrinned to observe that out 
of eighty animals, one of them brought $10, the remaining number from $1.75 
to *2 apiece. He did not sleep well that night, 'realizing how inefficiently he 
had served his company in the adjustment of the day previous. However, 
relying upon the adage of " everything comes to him who waits," he took 
note of this fact. Within a week a similar loss took place and he was wired 
to adjust. Upon examining the daily report found that the policy covered 
•Si, 500 on the barn and the contents, $600 of which was placed on six head of 
horses, with a loss limit of -*ioo. Here was his chance. It was an excellent 
opportunity to make a record for himself, and he forthwith went to the 
auctioneer who had sold the animals, obtaining from him a certified copy of 
the sale and the prices obtained, and, so as to fortify himself doubly, 


obtained the additional signature of the local agents, that this was true. 
and that same could be replaced for that figure. His face beamed with 
smiles as he soliloquized, "While it is possible that the entire six horses 
are burned, it is more than probable that one or two of them have been 
saved. My salvage will be unexampled in the history of adjustment." He 
got on the train, arrived at his destination, engaged a team and drove to 
the scene of the fire. The barn and contents were a total loss, the horses 
were saved. 


Now, the elders of Israel were wont to send out certain men, whom they 
did call specials, to go into the land of the Philistines and to seek out from 
among them men of good report and honest, who should be agents for them 
and who should seek to secure for them business among the people of the 
land. And the number of these specials was great and they did overrun the 
land of the Philistines, even the remotest corners thereof, so that there was 
no place where they might not be found therein. Now, in the second week 
of the second month there was held a feast in the great city of the elders, 
and many, both of the elders and the specials, were wont to assemble 
thereat, and when they had well eaten, the elders would rise and say unto 
the specials, "Are not ye they who have brought us in much business and 
ye have done great things for us "which have made our hearts glad and with- 
out you our efforts had been in vain. Wherefore we do greatly rejoice this 
day and especially that we have found in you such faithful servants." And 
when the specials heard these words they were exceeding glad, and they 
said to one another, " Surely these are good words and true, and were it 
not for us these elders would come to naught," for they did believe the 
words which the elders did speak. 

And it came to pass that after awhile the elders did assemble themselves 
together and did cause an edict to be made that the Philistines should no 
longer delay in the payment of such moneys as had been agreed by them (for 
it had been the custom of certain of the elders to permit long delay in the 
payments, insomuch that there was trouble even in obtaining that which 
was their due), but that they must pay what they owed. 

Now, after the feast, when the specials did go out again among the 
Philistines, these did say among themselves, "Are not these they who did 
speak fair unto us and did make promises unto us : Go to now, let us fall 
upon them and smite them, so that they shall perish from the face of the 
earth, for we will have no more of them. ' ' And they did according as they 
had said and fell upon them and smote them hip and thigh, so that there 
remained not one of them. And it came to pass that the elders met and 
were exceedingly sad and of a mournful countenance, but one of them arose 
and said, " Why do ye thus mourn and bewail? Have ye not heard the old 
saying that the fish which remain in the sea are as good as those that have 
been caught? Now, therefore, let us send out yet others among these Philis- 
tines." And the elders did rejoice at these words and they sent out yet 


others to take the places of them which had been slain. And it fell not out 
as they which had been slain had said, for the sun stood not still, neither 
did the moon stay its course, but the elders forgot the names of the slain, 
yea, even that they had been. 


Up to the time of the fire, I thought Isidor was square. He was a Jew, 
and his ancestors lived in Poland, but his credit was high at the banks. He 
paid good wages, and made the usual hundred per cent, on cheap goods, 
and from twenty-five to fifty per cent, on the highest grades. He kept all of 
the Hebrew holidays, but stood in with the Christians, and was considered 
a superior specimen of his race. When it came to a question of street car 
fare or postage stamps, he was as close as some Eastern men; but I did 
think he had too much business sense to match his wits against a Yankee. 
Still, you never can tell. 

The firm name was Wilzinski & Rosenstein. Its members were Isidor 
Wilzinski and Moritz Rosenstein, the latter having a quarter interest and 
little to say in the management. I kept the books and occasionally acted 
as salesman. Their main store was at Pueblo, occupying the basement and 
first and second floors of the Kirtland Block, on Santa Fe avenue, where 
they carried a stock of clothing, averaging from £20,000 to $30,000. They 
were sole agents for the Stetson hats ; E. & W. collars and cuffs ; Douglas 
three-dollar shoes, and Jaeger underwear; were rated "B2" by Brad- 
street, and were supposed to be doing a profitable trade. They, also, had 
branch stores at Canon City and Cripple Creek. 

Pueblo had never been so dull. The Bessemer rolling mills had been 
shut down several months; the Mesa Hotel had just burned; the Grand 
Hotel had been closed for a year, and "the Pittsburg of Colorado 1 ' looked 
like San Diego after the boom. Our business had fallen off one-half; 
collections were almost impossible ; creditors were pressing, and ruin 
seemed near at hand. 

The firm had been carrying $19,000 on stock. The policies ail expired 
on October 1. On September 15 we completed an inventory, showing 
a stock value of $20,583.37. Isidor kept the inventory, and made no record 
of it on the books. Our policies had the usual broad permit: "Other 
concurrent insurance herewith permitted." On renewal, the insurance 
was increased to $29,000. 

About ten o'clock on Sunday evening, October 15, the alarm sounded, 
and a dense volume of smoke was seen pouring from the basement of 
our store. The Pueblo fire department is a good one ; the firemen made 
a lightning hitch and run ; threw two streams in the basement, and had 
the fire put out within seven minutes after the alarm. 

Monday morning the firm notified the local agents that they had sus- 
tained a heavy loss, and asked for an immediate adjustment. The com- 
panies were advised of the claim, and on the Wednesday following four 
adjusters arrived from Denver. They examined the stock: looked wise. 


said little, smoked good cigars, and told several stories that were entirely 
new to me, but did nothing definite toward a settlement. On the after- 
noon of the second day after their arrival Isidor grew uneasy. 

"How soon will you get this fixed?" he asked. " We want to clean 
up and open the store. Our expenses are going on. and we are losing fifty 
dollars a day, easy. 

The adjusters laughed, and lighted fresh cigars, and resumed their 
anecdotes. Isidor was getting mad. Just then there was a light rap on the 
front door, which had been tightly closed. Isidor opened it. and in 
stepped a quiet looking man, who said, with a pleasant smile : 

" Is this Mr. Wilzinskir* 

" What's left of him." growled Isidor. "Who are you?" 

" My name is Bird," said the new comer, handing him a card reading 
as follows : 


Adjuster of Fire Losses. 
1 561 Curtis Street. 


"I represent thirteen thousand of your insurance. Is there any dam- 
age '." 

"Is there any damage J" repeated Isidor : "there's fourteen thousand 
five hundred. At any rate, that's what we first claimed, but the stock's 
looking worse and worse, and I wouldn't be surprised if we lost twenty 

"May I trouble you to show me your policies r" asked the adjuster. 

"Certainly. Mr. Bird," said Isidor, "no trouble at all." 

After closely examining the policies, the adjuster inquired : 

• * Where did the fire start \ ' ' 

u In the basement." said Isador. — adding quickly, "that is. we think 

"Let me see the basement, please," asked Bird. 

"Why there's nothing there," said Isidor. changing color a little. " We 
didn't keep any stock there: there's nothing but old boxes and rubbish." 

"I'm not particular about going down, myself." answered Bird, in a 
very smooth, pleasant way — "in fact, it isn't really necessary, but you 
know the rules of the companies, Mr. Wilzinski : they expect us to go all 
through a building. There's no sense in it. but I'll just look down for a 
minute and let it go at that." 

They went down. Bird looked carelessly around and remarked : 
'•There's quite a strong smell of coal oil." 

"We filled our lamps down here," said Isador. 

After returning up-stairs and looking carefully through the stock. Bird 
consulted with the other adjusters for a few minutes, during which recess 
Isador and his partner had a quiet conversation in the office, of which I caught 
the words: "Raise him to twenty thousand. Isador: he'll stand it." 

Bird then came forward and said : "The other adjusters have authorized 
me to act for them. Is that asrreeable to vou \ " 


"Yes," said Isador, "perfectly. I'd rather have it that way. When I 
first saw you, I said to myself, 'there's a fair, square man, who knows 
his business.' " 

"All right," said Bird, "it won't take five minutes to settle it. Do I 
understand you to say that you claim a loss under the policies, and, if so, 
in what amount ? ' ' 

Isador rubbed his hands, and said, "Mr. Bird, we've lost twenty 
thousand, if we've lost a dollar; but I don't want to be hard on the com- 
panies. I'll say sixteen thousand, and we'll never take a cent less." 

Bird laughed. He had such a genial, pleasant way with him that, by 
this time, Isidor, Moritz, the other adjusters and myself had clustered 
around as if we were drawn to him something like iron filings to a magnet. 

"Where is the loss?" he asked. 

' ' Where \ ' ' shrieked Isador. ' ' Everywhere ! ' ' 

"Were any of the goods burned, Isador?" asked Bird, in a rich, mellow 
tone, and added: "You'll excuse my familiar way of talking; I'm from 
Connecticut, you know." 

"That's right," was the reply, "call me Isidor. None of the goods 
were burned; but look at the smoke ! the stock is ruined." 

"By the way," asked Bird, "do you use gas for lighting the store?" 

"Nothing but gas," said Isidor. 

Bird smiled, and what a pleasant smile he had. 

"Are the goods blackened or discolored?" asked the adjuster. 

"Not yet," said Isidor; "it's the odor — the smell of smoke all through 
everything. We can't sell the goods for ten cents on the dollar." 

"What's the value of your stock?" asked Bird. 

"About forty thousand. We carry a big stock of the finest kind of 
goods," replied Isidor. 

"Then the damage you claim is a smoke damage?" asked the 

"Yes!" said Isidor, "It's a smoke damage; they all say that's the worst 
kind of damage to clothing. " 

"A damage from the odor; from the smell of smoke only?" asked Bird. 

"Yes, that's it; the goods are saturated with it." 

"Did you open the store and let the smoke out, after the fire?" said the 

"No," said Isidor. 

"Did you put the goods in the best possible condition, as required by the 

"We were afraid to touch them," said Isidor. 

"Is there anything in the policies requiring us to pay anything because 
there has been the smell of smoke in the store?" asked Bird. 

' w Isn' t there ? ' ' said Isidor. 

"No," answered Bird, "there is not; there is no liability whatever." 

"And don't we get anything?" said Isidor, turning pale and trembling. 

"Nothing from us," said the adjuster, mildly and soothingly, u not 
one dollar." 

. kk We'll sue the companies!" shouted Isidor. 


"Listen to me,"' said Bird; "you don't understand your own case. 
This is the way it is: You claim a £40,000 stock; you have about .$20,000. 
You are entitled to about $15,000 insurance on your present stock; you 
have $29,000. The fire was started in two places in the basement, Sunday 
night, and coal oil was freely used. Your lights are gas; you don't use 
coal oil lamps. Now, I'll say nothing more on those points. Next comes 
the question of smoke damage. You claim a damage from the smell of 
smoke only. A little smoke benefits clothing, and will kill the larvae 
of moths, every time. Open your doors, and in three hours the odor will 
disappear. Now is the opportunity of your life. Advertise a fire sale: 
throw open the store, and in the next two weeks you will sell two-thirds 
of your stock at a big profit. I'll tell you how to do it. Get signs painted 
on cloth" — 

'•They're all ready," interrupted Isidor, with a sheepish smile, as 
he went in the office and brought out several bolts of sheeting and 
unrolled them, on which were painted, in large red letters : 

The Insurance Companies Have Settled ! : 
The Entire Stock for Sale 

at Twenty Cents on the Dollar ! ! 

"That's the idea," said Bird. "Your fortune's made. Now, how about 
our expenses?" 

"What ! " said Isidor. 

"You claimed a loss when there was none, and we could hold you for 
our expenses, but let it go Isidor, let it go. Come out and set up the 
cigars for the crowd, and w^e'll call it square." 

And Isidor did. 

The ' ' great fire sale ' ' began next day, and in three weeks the bulk of 
the sto^k was sold at a large profit. The firm paid their debts : banked 
the surplus, and to-day are doing the largest clothing business in Pueblo. 

Moritz asked Isidor why he didn't hold out for the amount of his claim. 
and why he backed down so quickly. Isidor answered: "Moritz, that 
adjuster was born in Connecticut : he was on to the coal oil, and the policies 
don't say anything about the smell of smoke ! " 

' ' Isidor, ' ' said Moritz, ' ' you vos yoost right. ' ' 


W. B. French, the veteran adjuster and flour mill expert of Chicago, 
tells the following : 

"The loss occurred at Joliet, under a 'Continental' policy. The assured 
was a woman, and the policy read : 

* $1,000 on her two-story frame residence: and $200 on her surroundings." 

I settled on the building, and then asked : 


' Madam, what are your surroundings?' 

* What did you say, sir?' 

1 Your surroundings, madam, what are they V 

' What do you mean, sir? They are quite as good as yours, I think.' 

' No offense, madam; please read your policy.' 

She did so, and then said J 

'Excuse me; I didn't notice the wording. Well, sir, what are my sur- 
roundings V she asked with a smile. 

I replied: 'Ordinarily, I would define a woman's 'surroundings' as 
her wearing apparel.' 

' What I thought I was insuring,' she answered, 'was against loss on 
the trees and shrubbery surrounding my residence.' 

' All right,' I said, and allowed her fifty dollars damage on the shrubbery 
and trees. 

It was the only case of the kind I ever had, but I think I make a common 
sense adjustment." 


By request I have had a dream. My dreams at this time are extra dry, 
with the least little drop of angostura and a bit of lemon peel added ; but 
they are quite as acceptable to me as of yore, and do not leave that "tired 
feeling" spoken of so tenderly by Doctor Watt in the lines commencing : 

Oh ! Lord ! how weak am I." 

I was thinking of this and congratulating myself that age had its com- 
pensation ; for what I held was dissipation in my youth I now find to be a 
simple tonic, prescribed by the most distinguished physician my purse can 
supply. I was thinking of this, I say, when who should walk through the 
door but my good friend Al Snyder. 

"Why! dear old man," I cried, "welcome! draw up to the grate. 
Excuse me for not recognizing your knock. Fact is, Al, I am getting old ; 
these white hairs are not like the black locks of 1891 ; eh, old boy ? These 
store teeth look well, but, although I have worn them now some twenty 
years, and have paid for set after set, the artificial things don't fit, and I 
don't believe they ever will. Glad to see you. Now I have my specks on I 
can see you quite plainly, although, between you and me, I hate to admit 
that the oculist has measured my eyes for the last time. He says I have 
the strongest glasses there are in the shop. I knew you when you came 
through, somehow, without their use. You are looking first-rate — good 
color, fresh and clear complexion, and, as I live, you are getting fat ! 
Well, well, who ever expected to see you fat ? Ha, ha, ha. 

"B-u-r-rr! how cold it has grown. Mend the fire, like a good friend, 
will you \ and toss that rug over my knees. If my legs were npt so bad 
with rheumatism, old partner, I would bring the decanter from the corner 
cupboard myself. Thanks. Will I allow you \ Of course. I was just about 
to ask for a brew, such as we had after the big fire at Eureka, Nevada. 


kk Ah! what a delightful time it was. All the boys were there, and how 
they did work, getting up early every morning, digging for dear life among 
books of account, fighting like mad with every honest claimant, and having 
a smooth and easy time with every scamp, only to find out later that the 
scamp got away with the money. But after 9 o'clock P. M. it was playtime. 
Let me see, what w r as the name of that good fellow who sang such lovely 
songs after 9 o'clock \ Dear, good fellow he was, and he did sing divinely, 
but my memory is so bad I can hardly recall his name. He sang one jolly 
song I appreciated. The words were something like this : 

" 'He took a line 
On a mansion fine, 
In a free and a regular way; 
And the premium he, 
With a policy fee, 
Collected the self-same day. 
A draft was brought 
And with the report 
It went to the office straight ; 
But the manager sneered 
At what appeared 
An incendiary's bait. 
Chorus : 

If you want to make your mark, dear boys, don't be in a hurry; 
Delay reports, remittance hold, and let the office worry.' 

"And do you recall that mischievous chap who came in by stage one 
night — he and a lady passenger. The rooms were all taken, so he worked 
Arthur Phipps to give up his bed to the lady, and while he kept the lady 
company Arthur got his sleep in a chair. Oh ! he was a rogue. But Arthur 
had the laugh on him later, I am told. 

' ' That story brings to mind another. I was at Boise in a hotel crammed 
with guests, when along came Jimmie Free, and not a bed to be had. Jim 
sized up the fellow who had the second bed in my room — a fresh young 
fellow, who came as a delegate to some ancient order of something or other 
— and he worked him beautifully. Asked to let him know at once when I 
created a disturbance during the night. Said I was mad as a March hare, 
but harmless ; that is, as a rule, although I had been known to do mischief. 
Well, Jim got the bed, and the young fellow made other arrangements. 
Then we rigged a tic-tac on the window and scared our Cornish friend out 
of his bed and down the cold stairs in his nighty. 

"But, dear me; excuse me for this digression. I am inclined to be so 
garrulous in these days; if I bore you, please stop me. 

"The water is hot, so mix the toddy, my boy, and we will drink to the 
days gone by. What is that you have in the little vial? an elixir of youth 
and a secret compound of your own? Well, put some in; I can drink any- 
thing in these days. Thanks. That is awfully good and goes to the right 
spot. Why, how warm and glowing I feel already, and my sight never was 
so good. I can really see the application of the Kinne rule quite plainly. 


Wonderful I And I can hear better than ever I did. I can hear rates 
dropping way up in Oregon, and in the distance I detect the sound of the 
return wave of business prosperity. See, I am on my feet and can stand 
firm and erect. If this is the result of your elixir, mix again and I will 
keep a-stepping till the end of time. My sense of smell is wonderfully 
acute, too, for I can detect the odor of sanctity from certain offices away 
down on California street. It smells like something burning." 

"And well it may smell like something burning," said my mother-in-law, 
"for you have put your lighted cigar on the table cloth." 


This is a true story of a true special. His greatest ambition was not the 
attainment of high art in adjustment, but to see how deferential he could 
be in the presence of the fair sex. 

He was adjusting a loss in the San Joaquin valley and had a severe 
struggle with the old man, and made a salvage possibly larger than it 
should have been. About this time he was introduced to the old man's 
pretty daughter. She came, she saw, she conquered. 

The adjuster sent the old man to the notary public to swear to his claim, 
and the following conversation took place between the adjuster and the 
daughter : 

"You say you have just returned from abroad. How I should like 
to have been there ; and where did you visit, may I ask 3 " 

"Our travels were confined principally to Ireland," she responded, 
rather naively. 

"Did you see the Blarney Stone * " he queried. 

"Oh, yes," washer quick response. 

Whereupon he commenced a most eloquent dissertation upon that most 
famous object, and said that in view of his being unable to kiss that stone 
himself he wished to do so by proxy, at the same time offering to embrace 
her. She drew back with astonishment, but with a winking eye that 
betokened intelligence, replied : 

"Sir, I did not kiss it; I simply sat on it." 



Some years ago it fell to my lot to contribute to the " Knapsack" a brief 
note on the impressions formed and the experiences met with during the 
first year or two of my career as "city outside man" in one of our insurance 
offices. I certainly did think that this literary effort would have settled 
all future aspirations in the same direction, but lapse of time has apparently 
healed the wound, and the patient, long-suffering, forgiving editor of this 
periodical has requested "more copy." 


Perhaps (happy thought, or, rather, unhappy thought), perhaps the 
editor is given to requesting contributions from his prosiest writers in 
order that his own interesting articles, betwixt and between which they 
are most ingeniously sandwiched, may seem all the brighter by the com- 
parison. (N. B. — I must look into this.) 

The life of a "city outside man" is not an altogether dreary round of 
repetitions, like an expiration book. Stay, I must correct that simile. The 
expiration book now a-days is far from being a "dreary round of repetitions." 
I wish it were. 

Where are now the happy risklets 

That each year brought back to me \ 

Gone, alas! where trade is brisk — that's 
In the other fellow's book, you see. 

To be sure the main portion of one's work exhibits a rather painful 
monotony. It is always, in each case, the same round of repeated visits to 
find the man, who when found has to confer with his wife (or, frequently, 
his wife's mother), and who when that trial is over, and after consultation 
with half the neighborhood, finally, we will say, decides to give you the 
renewal. All this has consumed time, and car fares, and sometimes even 
several "long bits" for cigars and lemonade; but now the city outside man, 
with an elasticity of spirit that Knows no weakening, and a confidence in 
human nature that will not down, returns joyously to the office with the 
renewal order in his pocket, and in his mind the blissful belief that all the 
trouble and anxiety in regard to this particular risk is over for another 

And yet he, miserable being, knows full well that the "office man" will 
not check that rate for him until the typewriter girl has finished telling all 
about last night's surprise party; and that the policy-writer will in cold 
blood place that application underneath a batch of seventy-five others, and 
that it will not move his stony heart to tell him you must deliver that pol- 
icy by the same evening or lose the risk ; and that the manager — well, no 
human agency may divine just how the manager will view that risk by the 
time it reaches his desk. It depends somewhat upon the contents of the 
latest telegram from Seattle, somewhat upon the position of last night's 
crab salad, and not a little upon the amount of green paint daubed over the 

Let us suppose the policy signed, stamped and delivered ; and the outside 
man's agony is now nearly over. It used to be a serious problem whether 
the premium could be collected before the policy expired, but that is now all 
a thing of the past. Nobody dreams of letting a bill run over thirty days 
from the first day of the month following that in which the policy is writ- 
ten. Nobody ! ! 

This is the invariable routine, and it certainly Avoyld present a dreary 
monotony were it not for the different characters encountered during the 
work. The "assured," in San Francisco, is a personage of such complexit y 
that age cannot wither nor custom stale his infinite variety. 


There is, for example, the nice old gentleman, who motions you to a seat, 
adjusts his gold-rimmed eyeglasses, and then calmly and deliberately 
proceeds to unfold the policy and read through the written and printed por- 
tions from " In consideration of " down to the last condition of the New 
York Standard Form. One of them does this with me regularly every year 
and I can't stop him. He always winds up by saying that no sane man 
could read all that through and suppose for an instant that he'd ever get 
anything in case of a fire ; then he ponders a few moments, then pays the 
premium, and I quietly make my escape. 

Then there is the old lady who can't speak a word of English, but each 
year puts the surveyor through his few halting Parisian phrases, and 
receives them with as much animation and gratified expression as though 
they were new and brilliant sayings. The old lady, for three weeks before 
the time, invariably has the premium, down to the exact five-cent piece, all 
done up in a knitted stocking awaiting the surveyor's advent. Poor old 
soul — she has seen many generations of city outside men call annually, at 
successive periods, to bring her the renewal policy, and she reads them all 
(through her grandchild, as interpreter) with the most lively interest ; but 
now the honest old eyes are growing dimmer year by year ; one has to shout 
"bon jour" more loudly at each visit, and the poor old feeble frame hobbles 
with increased difficulty from room to room. I hope she will still be at the 
door next year — God bless her — for I am afraid the old house would look 
very tumble-down and the furniture appear very worn and worthless indeed 
if that good old soul were not there to make them seem valuable, and the 
office and I would have our first serious row if any of Tiffany's depreciations 
are used on her loss. 

What a change with the next picture ; for, as fortune has it, the two 
expirations came around together. Here I enter a richly upholstered parlor 
which seems to have been furnished without regard to expense, and yet 
there something is lacking, although you cannot tell just what it is. The 
curtains are "real lace," but a well-marked reminiscence of cigarette smoke 
infests them. When, after a pause, the "lady" of the house herself 
appears, slipshod and slovenly dressed, you wonder involuntarily to think 
how just such a room (in your younger days, of course) appeared so brilliant, 
and how just such women in full war-paint and bediamond liberally could 
have been so attractive. 

The madame does not pay her premium on delivery of the goods. She 
makes it the occasion for at least a couple of visits to the office, each time 
attended by a bevy of her most attractive maidens, who never fail to make 

an unmistakable impression on all the boys. No, I won't tell you where 

the house is. 

There is one man I know who buries his policies in a tin box out in the 
back yard, and you cannot produce statements so strong as will induce him 
to place more than $500 in any one company, home or foreign. A woman 
nearly always keeps her policy in a bureau drawer, where you and I couldn't 
find it in a year, but from which she produces it immediately upon demand. 


The ,l outside man'' in a very few years learns a great deal about human 
nature ; sometimes, in a great many years, he may learn something of insur- 
ance. At least, that is an impression I gathered not long ago in the course 
of a few moments' conversation with the manager. I walked into his office 
and said, "Well, sir, it is exactly five years ago to-day since I entered your 
office for the first time and commenced work." "That so?" was the reply; 
"Great Scott ! how time does fly; well" (this with a chuckle, expressive of 
the most intense satisfaction) "well, so it is, and you don't know a damned 
thing more about the business now than you did then." After this the 
only anniversaries I intend to call to his mind are Christmas time and the 
summer vacation. 



There was a vein of originality about our new agent at Hanging Rock, 
Colorado, that led us to hope that he would pan out the pure metal, with 
only a trace, here and there, of lead and copper, but the final assays were 

When he agreed to act for us, he said : "I don't know much about insur- 
ance, but I'm a hustler and willing to learn." That sounded encouraging, 
and I began to read to him our prohibited list, beginning with ' ' auction 
stock " and ending with " zinc factories," calling special attention to the 
combustibility of "hay barns," "Chinese laundries" and " powder maga- 
zines " ; ringing the alarm on "cigars and tobacco"; calling in the patrol 
on " lithographic stones " and sounding the police whistle on "wall paper 
and paint stock." 

He interrupted me with the remark: " I can't remember all of those. 
Alii want is to know the risks you can take, for after I write a policy, I 
never will cancel. ' ' 

I gave him the desired information ; cautioned him about limits, moral 
hazard and prompt remittances, and took the morning stage for Gunnison. 
His first letter, received some two week later, said : 

" I'm working up a big business on a new plan. You will be surprised 
when you learn how simple and easy it is. I'm careful about getting an Ai 
moral hazard and no excess lines. Yesterday, Bill Brown wrote up a policy 
of §2,500 on the furniture and fixtures and everything in the house, situate 
in the 'Miners' Home,' a first-rate, third-class, wooden hotel, with stove- 
pipe flues, ten miles from here, at the crossing of Rattlesnake Gulch and 
Mesquit Creek. The whole outfit isn't worth six hundred, but Bill is a 
dead shot, and said if the policy didn't stick, he'd cancel me at short range 
with a Winchester, and wipe out the agency ; so I reinsured $2,475, with 
the other agent, keeping $25 for us, covering on the cook stove, with patent 
water back. If she burns, as I think she will, we'll have a salvage, sure." 

During the next six months, he sent in nineteen curiously worded re- 
ports, with the numbers badly mixed. 

We supplied him with fifty policies, numbered from ten thousand five 
hundred and one to ten thousand five hundred and fifty. None of the num- 


bers of his reports were consecutive. In answer to queries, he merely said : 
"That's my new system aworkin." Finally, I made a special trip from 
Denver to Hanging Rock, and asked an explanation. 

" This system is simple and effective," said he. " I thought it out my- 
self, and it's a daisy. Of course, I don't know anything about policy writ- 
ing, and the man who wants to insure knows what he wants better than I 
can tell him ; so I signed all of the policies and distributed them around 
town, among the business men, and asked them, whenever they got ready 
to insure, to fill out the policies themselves and let me know. Then I let 
you know, and that's the reason the numbers don't run regular. If number 
forty-nine writes up his policy before number nineteen, I send the report 
right in. In time, the numbers will check up all right, but it may take a 
year before they all fit in. How do you like the system, isn't it neat? It 
suits our people exactly." 

I stayed a week; got in all of our policies, except Bill Brown's, and took 
up the agency. 

It was a needed lesson, and I profited by it. 


One of the pleasantest dinners given by the Association was that 
at the close of the eighteenth annual session, Wednesday evening, 
February 21, 1894, at " Maison Riche. " 

The dinner was under the management of the time-honored com- 
mittee, Mr. George W. Spencer and Mr. George F. Grant, who have 
become famous for, among many other accomplishments, arranging 
delightful dinner occasions. 

The menu was as follows : 

Sauternc. Eastern Oysters : 

Hors D'Ovuvres. 

Olives. Caviar. Anchovies. 

Green Turtle, clear. 

Striped Bass, Hollandaise. 

Entrees : 
Claret. Filet de Boeuf, pique, fresh Mushrooms. 
Ris de Veau, a la Pompadour. 



Vegetables : 
Asperges, Hollandaise. 

Roman Punch. 

Roast : 

Canvasback Duck. 


Entremet : 
Ice Cream, in moulds. 

Dessert : 
Fruits. Gateaux Fromage. 

Cafe Noir. 

Seated about the board were the following members and guests: 

D. J. Staples, 
Wm. J. Dutton, 
G. H. Mendell, 
R. D. Hunter, 
T. C. Van Ness, 
Louis Weinman, 
R. P. Fabj, 
Frank G. White, 

B. Faymonville, 
Frank A. Thompson, 
H. S. Watson, 

J. W. G. Cofran, 
Charles M. Keep, 
H. W. Wright, 
A. G. Dugan, 
Amos F. Sewell, 
George F. Grant, 
J. D. Maxwell, 
Charles T. Parker, 
Charles R. Story, 

C. Mason Kinne, 
R. G. Brush, 

E. W. Carpenter, 
W. H. Hill, 

John Scott Wilson, 
Geo. D. Dornin, 
N. T. James, 
W. S. Duval, 
Rolla V. Watt, 
Charles B. Hill, 
L. F. Lamping, 
W. B. Hopkins, 
George F. Ash ton, 

J. H. McKowen, 
Franklin Bangs, 
M. J. Green, 

A. Wenzelburger, 
James H. De Veuve, 

F. B. Kellam, 
J. L. Fuller, 

J. M. Shawhan, 
Charles Dickman, 
Frank Thompson, 
S. D. Ives, 

G. W. Spencer, 
F. G. Argall, 
H. Danker, 

V. Carus Driffield, 
W. J. Clemens, 

B. D. Smalley, 
E. L. Thompson, 
A. W. Thornton, 
Geo. C. Boardman, 
J. M. Beck, 

J. D. Bradford, 
Arthur M. Brown, 
Russell W. Osborn, 
Wm. H. Gibbons, 
Tudor Tiedmann, 
Homer A. Craig, 
Sidney H. Smith, 
Volney Howard, 
William Sexton, 
P. Outcalt, 
H. M. Grant, 
J. M. Harcourt, 


William H. Friend, Franz Jacoby, 

W. H. Lowden, J. H. Morrow, 

E. B. Farnsworth, W. J. Callingham, 

W. C. Wooley, Frank M. Avery, 

A. J. Wetzlar, John G. Conrad, 

P. G. Voss. 

The tables were beautifully decorated with smilax and cut flowers. 
The banquet hall itself is very pretty, and when the guests were 
seated the scene was very pleasing and animated. 

Mr. Stephen D. Ives, the retiring President, occupied the post 
of honor. At his left was Mr. H. M. Grant, last Past-President, 
and at his right, Mr. Rolla V. Watt, the President-elect for the 
coming year. 

When coffee and cigars were reached President Ives arose and 
appropriately referred to these, the closing acts of his administra- 
tion, wishing the Association continued success and usefulness. He 
called upon the President-elect, Mr. Rolla V. Watt, who thanked 
the Association for the honor conferred, spoke strongly of the 
benefits of the organization and hopefully of its possibilities in the 
future. Mr. Watt stated that he had enjoyed the personal acquaint- 
ance of all of the Past-Presidents of the Association, with the excep- 
tion of Mr. B. F. Low, the first President. He spoke feelingly of 
Mr. C. T. Hopkins, Mr. A. P. Flint, Mr. Z. P. Clark and Mr. J. W. 
Staples, all Past-Presidents who have passed over the river, and 
then called attention to the fact that of the thirteen living Past- 
Presidents ten were present at the banquet. 

No toasts or set speeches had been arranged for, but Chairman 
Ives informally called upon and received responses from the follow- 
ing gentlemen in the course of the evening: V. Carus Driffield, D. 
J. Staples, T. C. Van Ness, H. M. Grant, T. J. McCarthy, George 
Grant and John Scott Wilson. 

The speeches were interspersed with sweet music by a quartett 
composed of Messrs. Frank Thompson, W. B. Hopkins, J. M. 
Shawhan, Chas. Dickman. Also solos by Mr. Dickman and Mr. W. 
J. Callingham. As in years gone by, our old friend and fellow- 
member, Mr. E. W. Carpenter, presented another topical song, 
which, in the language of Farmer Stebbins, ' ' We will paste in right 
here " : 



Prom social point of view we look 

Upon our fellows, kindly, 
And to their business vagaries, 

Close friendship's optics, blindly; 
A "manager" we may detest, 

Whose ways are dark and dreary, 
Yet for the "man" have friendly thoughts, 

He's socially so cheery. 

Chorus (Slow march time) : 

Such a nice man, too, such a real nice man, 
So affable and full of information, 
All who know him, must admit, 
He's a man of brains and wit, 
And a gentleman of spotless reputation. 

He says he won't, and yet he will, 

Give rebate should he like to, 
Excess commissions also pay, 

Through tricks ad inflnito. 
When losses come he stands aloof, 

Lets others work and worry, 
But, figures made, to favor gain, 

Pays claimants in a hurry. 

11 There's naught in this great world," he boasts, 

" Shall stop me from succeeding, 
I'll make just ev'ry scoop I can, 

Repressing conscience-pleading ; 
Thus while the honest dolts plod on, 

I'll soon become real wealthy, 
Then quick retire from the 4 Cosmos Fire,' 

With a gold reserve quite healthy." 

And so the choicest gilt-edged risks, 

Come crowding to his door, 
His premiums mounting higher up, 

His morals tumbling lower, 
His loss ratio quite modest is, 

His adjustments are made gratis, 
He taps his massive brow and says, 

"What brain as this one great is?" 

But the " Eternal Fire " (perpetual plan) 

Does business somewhat later, 
It's "always low as the lowest" bait, 

Will ' ' scoop ' ' in our rebater. 
Then sizzling there, his sulphured thoughts, 

Revert to cooler creatures, 
To the snow-made image of boyhood days, 

With frosty, frigid feature. 


That image clothed in coat of sleet, 

Till ice it all seemed to be, 
Like all creation he'd like to change, 

With that creation, may be; 
But he's struck a special hazard hot, 

Sans sprinklers automatic, 
A "fire "-man's lot he'd gladly change 

For an ice man, more phlegmatic. 

Chorus : 

Yes, an ice man, true, just a real nice man, 

A triumphant work of childish refrigeration, 
Though with sightless snow-ball eye, 
And a mouth that couldn't lie, 
Yet better far than sin's incineration. 

At midnight ;i Auld Lang Syne" was sung. President Ives 
relinquished the post of honor to Mr. W. J. Callingham, who con- 
ducted the closing hours of the dinner. 

The eighteenth annual meeting then adjourned. 



To the Officers and Members of the Fire Insurance Association of the Pacific: 

Gentlemex — Your committee appointed to investigate the conditions of 
Builders' Contracts in regard to liability of insurance companies in event of 
fire, find : 

" That in the general contract in use by builders in the city of 

San Francisco, the relative interests of owners and contractors in 

buildings in course of construction are not clearly defined." 

Your committee therefore recommends that the Builders' Association of 

the City of San Francisco be requested to add the following clause to their 

contract, viz. : 

" The owner shall not be liable or responsible for any accident, 
loss or damage happening or occurring to the works specified in the 
within contract prior to the completion and final acceptance of the 
same, with the exception of loss or damage by fire or earthquake, in 
which event he shall be liable with the contractor in such proportion 
as the owner's payments shall bear to the excess value of materials 
and labor yet unpaid to the contractor." 
Respectfully submitted, 


San Francisco, June 18th, 1893. 



Whereas : In the providence of God, we are 
called upon to recognize with deep sorrow, the 
removal from our midst of our former associ- 
ate, Chas. W. Dohrmann. 

Resolved : That in his decease we realize 
the loss of a friend whose hand and heart 
were always on the friendly side; who be- 
lieved in human sympathy and practiced it ; 
whose tireless energy and loyalty to his con- 
victions were subjects of respectful recog- 
nition. His impulsive generosity, his tender 
sensibility, his joyousness and geniality, last- 
ing through his long wearing illness to the 
day of his demise, will ever keep his memory 
fresh in our hearts. 

Resolved: That to his afflicted wife and 
family we offer our heartfelt sympathy in this 
hour of trial; and that these resolutions be 
placed upon our minutes, and that a copy, 
suitably engrossed, be sent to the family of 
our departed and lamented brother. 

Johx Scott Wilson. 
V. Carus Driffield. 
B. J. Smith, 




The Association having by the death of 
Herbert L. Low, lost one of its most valued 
members, hereby gives expression to the 
esteem which it felt for him and to the sorrow 
occasioned by his departure. 

His reputation as one who was loyal to his 
friends and just in his dealings with all men, 
whose abilities were exceptional and whose 
companionship was a blessing, preceded him 
from the East, and it is a source of profound 
regret that his days upon the Pacific Coast 
should have been cut short just as he was 
reaching the prime of life, and before lapse of 
time had permitted to his associates a full 
enjoyment of that acquaintance which scant 
opportunity had taught them to so highly 

In extending its sympathies to the bereaved 
son, the Association commends the noble ex- 
ample of the father. 

E. W. Carpenter, 
J. N. Reynolds, 
Geo. E. Butler. 




The committee appointed to draft a memo- 
rial upon the death of our lately deceased 
member, Isaac Manheim, beg to submit the 
following : 

Resolved : That in the death of this well 
known and highly respected gentleman, the 
Association has lost a member who, whilst he 
may not have been active in its councils, has 
always commanded the esteem, good will and 
respect of his fellow members. From the in- 
surance ranks in San Francisco has fallen out 
one of the oldest in the profession. Prominent 
in local circles, upright and honest in all his 
dealings, a correct, conscientious business 
man, a faithful friend, and one whose word 
could always be implicitly relied upon. In 
family circles it would be hard indeed to find 
a more devoted husband, a better or more 
loving father. Of him it may be truly said 
that those who knew him best honored him 

Very respectfully yours, 

Edward Brown. 

C. Mason Kinne. 





Agard, J. J., Special Agent, Hartford Fire Insurance Company. 
Anderson, Hugh, Adjuster, Salt Lake, Utah. 
Andre, A. A., Independent Adjuster. 
Andrew, John, Special Agent, Butler & Halden. 

Ashton, Geo. F., General Agent, Orient and Providence- Washing- 
ton Insurance Companies. 
Avery, Frank M., Special Agent W. J. Callingham. 

Bagley, W. H., Special Agent, Phoenix and Home Insurance Com- 

Bailey, J. D., General Agent, Insurance Company of North America. 

Barkman, F. C, Assistant Manager Continental Insurance Company. 

Barnett, B. N., Adjuster. 

Bangs, Franklin, Assistant Secretary, Home Mutual. 

Bates, Leslie, Special Agent, Gutte & Frank's Agency. 

Beck, J. M., Special Agent, Fire Association of Philadelphia. 

Belden, H. K., Manager, Hartford Fire Insurance Company. 

Bertheau, C, Manager, Hanover Insurance Company. 

Bertheau, Max A., Assistant Manager, Hanover Insurance Co. 

Boardman, Geo. C, General Agent, ^5Dtna Insurance Company. 

Borchers, H. H., Special Agent, New Zealand Insurance Company. 

Boyd, H. C, Assistant Manager, Rudolph Herold's Agency. 

Bromwell, L. L., Vice-President, Oakland Home Insurance Com- 

Brown, Edward, General Agent, Brown, Craig & Co. 

Brown, A. M.. Special Agent. Brown, Craig & Co. 

Brush, R. G., Special Agent, Liverpool. London and Globe Insur- 
ance Companies. 

Burks, Chas. F., Adjuster. 

Butler, Geo. E., General Agent, Phcenix Assurance Company of 

Callingham, W. J., General Agent, City of London, Scottish Union 

and National, and Security Insurance Companies. 
Carpenter, E. W. 

Chalmers, W. L., Fire Insurance Adjuster. 

Cofran, J. W. G., Manager, Hartford Fire Insurance Company. 
Conrad, J. G., General Agent, Voss. Conrad & Co. 


Craig, Homer A., General Agent, Brown. Craig & Co. 
Craig*. Hugh. Manager. New Zealand Insurance Company. 

De Veuve, James H., Special Agent, Geo. F. Grant's Agency. 

Dibbern, J. H., of Manheim. Dibbern & Co., City Agents. 

Dick. B. C, General Agent Sun Insurance Company. 

Dickson, Robert, Manager, Queen, Royal Exchange and Connecticut 
Insurance Companies. 

Donnell, A. C. , General Insurance Agent. Okell, Donnell & Co. 

Dornin, Geo. D., Manager, National Fire Insurance Company of 

Dornin. Geo. W., Assistant Manager, National Fire Insurance Com- 
pany of Hartford. 

Driffield, V. C, Manager, Transatlantic Insurance Company. 

Dubois. S. V., Special Agent, Orient and Providence-Washington 
Insurance Companies. 

Dugan. A. G., General Agent, Springfield Fire and Marine Insurance 

Dutton, W. J., Vice-President, Fireman's Fund Insurance Company. 

Duval, W. S.. General Agent, Continental Insurance Company. 

Ecklin. Chas. C, Special Agent, Home Mutual Insurance Company. 
Edwards, L. B., Superintendent of Agencies, with Balfour. Guthrie 
& Co. 's Agency. 

Fabj. R. P., Special Agent, Fireman's Fund Insurance Company. 

Farnsworth, Ed. P., Aduster. 

Farnum, N. C, Special Agent, Home Mutual Insurance Company. 

Faymonville, Bernard, Second Vice-President and Secretary. Fire- 
man's Fund Insurance Company. 

Fennel, Henry T., Special Agent. Palatine Insurance Company. 

Fogarty. J. T., Special Agent, R. V. Watt's Agency. 

Folger, Herbert, Manager, Portland Branch. New Zealand Insur- 
ance Company. 

Foster, W. B., Special Agent, Westchester Insurance Company. 

Frank, Wm., General Agent, Gutte & Frank's Agency. 

Fraser, W. A., Special Agent, A. R. Gurrey. 

Friend. W. H., Secretary, Sun Insurance Company. 

Fuller. J. L., Special Agent, E. W. Carpenter. 

Gartner. A. F., Special Agent, Phoenix and Home Insurance Com- 
panies, Portland, Oregon. 

Gazzam. W. L.. Special Agent. North British and Mercantile Insur- 
ance Company, Seattle. Wash. 

Gibbons. W. H.. Special Agent. Brown. Craig & Co. "s Agency. 


Grant, Geo. F.. Manager, London and Northern Assurance Com- 

Grant, H. M., Secretary, Northwest Insurance Company. 

Grant, Tom C, Manager, North British & Mercantile Insurance 

Gunnison, A. R., Adjuster. 

Gurrey, A. R., Manager, Western of Toronto. British America. 
American of New York. 

Greene, M. J., Special Agent, Continental Insurance Company. 

Grim. Alfred R., Special Agent, Alliance Assurance Company of 

Gutte, I., General Agent, Gutte & Frank. 

Haldan, E. B., General Agent, Phoenix of London. 

Hall, O. N., Special Agent, Fire Association of Philadelphia. 

Haven, Chas. D., Resident Secretary, Liverpool and London and 

Globe Insurance Company. 
Herold, Rudolph, General Agent, Hamburg-Bremen and Niagara 

Insurance Companies. 
Heron, John D., Special Agent. 
Hewitt, Dixwell, Special Agent, Orient and Providence-Washington 

Insurance Companies. 
Hicks, F. S., Insurance Agent, Los Angeles, Cal. 
Hill, Wm. H., Special Agent, Brown, Craig & Co. 
Hillman, J. R., General Agent, American Central. Delaware and 

Pacific Insurance Companies. 
Hopkins, W. B., Special Agent, London & Lancashire Insurance 

Hamilton, J. K.. Special Agent. Insurance Company of North 

Hughes, Ed. O.. Special Agent, Palatine Insurance Company. 
Halsey, H. G., Special Agent, Fireman's Fund Insurance Company. 
Hunter, R. D., Special Agent, Fireman's Fund Insurance Company. 

Ives, S. D., General Agent. Fireman's Fund Insurance Company. 

Jacobs, Julius, General Agent. 

Jacoby, Franz, General Agent, Prussian National Insurance Com- 
James, N. T., United States Manager for Alliance Assurance Co. 

Kinne, C. Mason, Assistant Resident Secretary. Liverpool & London 
& Globe Insurance Company. 

Lamping, L. F., Special Agent, Springfield Insurance Company. 

Landers, W. J., Manager. Guardian and Sun Fire Assurance Com- 


La very, J. G.. Adjuster. 

Lockey. Richard. Adjuster, Helena. Montana. 

Louden. W. H., Resident Secretary. North British and Mercantile 
Insurance Company. 

Laton. Chas. A., General Agent. Palatine and United Fire Insurance 

Leonard. Geo.. Assistant Manager. Transatlantic Insurance Com- 

Lord, Leslie. Special Ag-ent, Geo. D. Dornin. 

Mackie, J. B., Special Agent. 

Magill. A. E.. General Agent. Phoenix and Home Insurance Com- 

Mailliard, J. W., Insurance Agent. 

Mann. H. R., General Agent, Mann & Wilson's Agency. 

Manning. F. J. H., Special Agent. Palatine Insurance Company. 

Marshall. J., Jr.. Special Agent Robert Dickson's Agency. 

Maxwell. J. D.. Insurance Agency. 

McElhone, F. H., Special Agent, Fireman's Fund Insurance Com- 

McCarthy, Thomas J., Adjuster. 

McKowen. J. H., Adjuster, Spokane, Wash. 

McVean. D., Special Agent, Transatlantic. 

Meade. Calvert, Adjuster. 

Mel, Louis, Special Agent. ^3Etna Insurance Company. 

Mendell, Geo. H., Jr., Special Agent. Fireman's Fund Insurance 

Merrill, M. H., Special Agent. Oakland Home Insurance Company. 

Miles, D. E., Assistant Manager, London & Lancashire Insurance 

Mitchell. Geo. M., Adjuster, New Zealand Insurance Company. 

Morrison. Ed. C Special Agent, ^Etna Insurance Company. 

Marston. J. A., Special Agent, Balfour, Guthrie & Co. 's Agency. 

Miller, T. L., Special Agent. 

Medcraft. R. C, Sub-manager. Imperial and Lion Insurance Com- 

Morgan. W. O.. Special Agent. Home and Phoenix. 

Morrow, J. H., Special Agent, W. J. Callingham's Agency. 

Mullins. C. F., Manager. Commercial Union Assurance Company. 

Naunton. R. H.. Special Agent. Commercial Union Assurance Com- 

Nearney. T. A., Special Agent, Northwestern and National. 

Niebling. E. T.. Special Agent, Commercial Union Assurance Com- 


Niles, Edward, General Agent, Alliance Assurance Company of Lon- 
Nippert, Paul M., General Agent, Fire Association of Philadelphia. 

Okell, Charles J., Okell, Donnell & Co. 

Osborn, R. W., Special Agent, Brown. Craig & Co. "s Agency. 

Otey, Mercer. 

Outcalt, Peter, Adjuster. 

Palache, Whitney, Special Agent, Hartford Insurance Company. 
Parker. Chas. T., Assistant Manager, Palatine Insurance Company. 
Parker, S. S. C, Special Agent, Okell, Donnell & Co. 
Pope, T. E., Assistant General Agent, ^Etna Insurance Company. 
Potter, E. E., General Agrent. 

Riggen, S. B., Adjuster, Portland, Oregon. 

Ridling, A. G., Special Agent, Continental Insurance Company. 

Scott, Chas. O., Special Agent, Insurance Company of North 

Sexton, Wm., Manager, Imperial and Lion Insurance Companies. 
Smith, Ben. J., Special Agent, Robert Dickson's Agency. 
Smith, H. Bronson, Adjuster, Dallas, Texas. 
Smith, H. H., Special Agent, Catton, Bell & Co. 
Smith, Roderick E., Special Agent, Fire Association of Philadelphia. 
Smith, Sidney H., Special Agent, London & Lancashire Insurance 

Spencer, D. A., Seattle, Wash. 
Spencer, Geo. W., Manager, Manchester, Caledonian and American 

Insurance Companies. 
Speyer. Walter M., Special Agent, Mann & Wilson. 
Sprowl, E. G., Special Agent, Liverpool and London and Globe 

Insurance Companies. 
Staples, D. J., President, Fireman's Fund Insurance Company. 
Stillman, A., Compact Manager. 

Story, Chas. R., President, Home Mutual Insurance Company. 
Storey, Frank C, Special Agent Rolla V. Watt's Agency. 
Sinclair, A. P., Special Agent, Phoenix & Home. 
Stoy, Samuel B., Special Agent, London & Lancashire Insurance Co. 
Stuart, C. A., Assistant Manager, Western of Toronto, British 

America, American of New York. 
Swett, Frank H., Adjuster. 
Smalley, B. D., Adjuster, Seattle. 

Sewell, A. F., Special Agent, Springfield Insurance Company. 
Seaton, L. M., Special Agent, Fireman's Fund Insurance Company. 


Spinney. Chas. S., Special Agent. Butler & Haldan's Agency. 
Smedberg, W. R., Smedberg & Mitchell's Agency. 
Spencer, H. McD., Special Agent. German Insurance Company of 

Thomas, W. P.. Superintendent of Agencies. Commercial Union 
Assurance Company. 

Turner, G. W., General Agent. Northwestern National Insurance 

Tyson, Geo. H.. General Agent, German-American Insurance Com- 

Tyson. R. J., Special Agent. German-American Insuranc Company. 

Thompson, E. L., Special Agent. Northwest Insurance Company. 
Portland. Oregon. 

Tiedemann, Tudor, Special Agent, Brown, Craig & Co. 

Thornton. A. W.. Special Agent. Insurance Company of North 

Voss. F. G., General Agent, Voss, Conrad & Co. 

Ward. Ben. E., Los Angeles. Cal. 

Ward, C. H., Special Agent, N. Y. Underwriters' Agency. 

Warren, Albert M., Manager Milwaukee and Mechanics Insurance 

Watt, Rolla V., Manager Royal and Norwich Union Insurance 

Weinmann. Louis, Assistant Secretary. Fireman's Fund Insurance 

Wenzelburger, A., Adjuster. 

Wetzlar. A. J., Fire Insurance Adjuster. 

Wheeler, Dalton. Adjuster, Los Angeles. 

White. F. G., Denver. Col. 

Wilson. D. B., Adjuster. 

Wilson, J. Scott, General Agent, Mann & Wilson's Agency. 

Williams. T. H., Special Agent, Imperial. 

Watson, I. S.. Special Agent. Home Mutual Insurance Company. 

Westlake, W. B., Special Agent. Home Mutual Insurance Company. 

Wooley, W. C, Special Agent, T. C, Grant. 

Wright. L. A., Special Agent. Alliance Assurance Company of Lon- 

Young. Frank W.. Special Agent. Home Mutual Insurance Com- 
pany, Denver. 


Honorary Members. 

Bigelow, H. H., Adjuster, San Francisco. 

Brodrick, W. J., Insurance Agent, Los Angeles. 

Conroy, T. J., Assistant Manager, Pacific Insurance Union. 

Dudley, W. W., Illinois State Agent, German- American Ins. Co. 

Edwards, J. G., Publisher Coast Review, San Francisco. 

Houghton, J. P., San Francisco. 

Hine, C. C, Editor Insurance Monitor, New York. 

Jack, A. Hill, General Manager, National Insurance Company of 

New Zealand. 
Kirby, D. L., No. 1 Pine Street, New York City. 
Low, Geo. P., Electrical Inspector, Pacific Insurance Union. 
McLellan, G. F., Insurance Agent, Los Angeles. 
Olmstead, W. N., 62 Cedar Street, room 10. New York. 
Park hurst, H., Surveyor, Pacific Insurance Union, Portland, Or. 
Porter, F. H., 303 California Street, San Francisco. 
Smith, A. D., Surveyor, Pacific Insurance Union. 
Winne, Peter, Helena, Montana. 


Of the IPaGifio. 

Officers for 1894. 

President. - - R. V. WATT 

Vice-President. ----- v. CARUS DRIFFIELD 
Secretary and Treasurer. - - - R. W. OSBORX 

Executive Comrr)ittee. 


Library Comn)ittee. 

California Knapsack. : GEO. F. GRANT. Editor 

I'fis uverpiiol & London I Globe k Go. 


Nineteenth Annual Meeting 

Fire Underwriters' Association 


K .^J<^. 

San Francisco, CaL, February 19th and 20th, 1895 








Annual Report of Secretary-Treasurer R. W. Osborn 5 

Report of Executive Committee Herbert Folger 7 

Address of the President Rolla V. Watt ( .) 

The Arson Committee^ s Wo?'h Geo. E. Butler 16 

Plate-dlass Insurance Jxo. R. Hillmax 25 

Little Fire Hazard* F. H. Porter 20 

Over-Insurance Chas. Towe 32 

The Special Agent High Craig 39 

The Special Agent Whitney Palache 44 

Prejudicial Influences T. D. Boakdmax 49 

Electric Light ami Poirer Plants Geo. P. Low 55 

Inspections Edward Niles 99 

Large Fires in American Cities Herbert Folger 70 

The Theory of Lines F. G. Aug all so 

Organization Upon Broader Lines Y. Cauls Driffield 98 

Report on Reinsurance Clause Committee 101 

Report on Mortgage Clause Committee 114 

California Knapsack Geo. F. Grant 124 

Annual Banquet 140 

Proceedings During the Vear 14? 

List of Members 149 



OFF/CKKS FOK 2*f>4. 

President ROLLA V. WATT 

Vice-President V. CARUS DRIFFIELD 

Secretary and Treasurer R. W. OSBORX 







California Knapsack— GEO. F. GRAXT. Editor 
ED. NILES, Assistant Editor 

Fire Underwriters' Association 


The nineteenth annual meeting- of the Fire Underwriters' Associa- 
tion of the Pacific was called to order by the President, Rolla V. 
Watt, on Tuesday, February 19th, 1895, at 10 o'clock A. M. 

The following- members were present: 

John Andrew, 
F. G. Arg-all, 
Georg-3 E. Butler, 
Georg-e C. Boardman, 
Leslie Bates, 
H. C. Boyd, 
J. M. Beck, 
R. G. Brush, 
H. H. Borchers, 
W. H. Bagley, 

A. M. Brown, 
Franklin Bangs, 
John D. Bradford. 
L. J. Beckett, 

W. J. Callingham, 
H. A. Craig", 
Hugh Craig. 
J. G. Conrad, 
Charles Christensen, 
George D. Dornin, 
W. J. Dutton. 
V. C. Driffield, 

B. C. Dick, 
A. G. Dugan, 
Frank J. Devlin, 

Frank M. Gilcrest, 
H. M. Grant, 
J. R. Hillman, 
W. B. Hopkins, 
W. H. Hill, 
R. D. Hunter, 

C. Mason Kinne, 
W. H. Lowden, 
Leslie Lord, 

L. F. Lamping, 

J. D. Maxwell, 

Calvert Meade, 

H. R. Mann, 

E. C. Morrison, 

R. C. Medcraft, 

George H. Mendell, Jr. 

D. McVean, 

J. H. McKowen, 
William Maris, 
Peter Outcalt, 
R. W. Osborn, 
T. E. Pope, 
William Reed, 
Walter M. Speyer, 
D. A. Spencar, 


Chester Deering, L. M. Seaton, 

Robert H. Delafield, R. E. Smith, 

H. Danker, B. D. Smalley, 

L. B. Edwards, Sidney H. Smith, 

E. P. Farnsworth, Frank C. Storey, 

Herbert Folger, C. W. Smith, 

J. T. Fogarty, Charles R. Thompson. 

N. C. Farnum, John Scott Wilson, 

W. A. Fraser, Rolla V. Watt, 

Guy Francis, Louis Weinmann, 
W. H. Gibbons, <- I. S. Watson, 

George F. Grant, W. C. Wooley, 

A. R. Gunnison, Albert M. Warren, 

A. R. Currey, A. R. Grim. 

The President — The first number on our programme is the report 
of the Secretary and Treasurer, Mr. R. W. Osborn. The minutes of 
the last annual meeting, having been printed, will not be read. 

By your order at the quarterly meeting, which has just been 
held, the resignation of Mr. E. W. Carpenter will take precedence 
of everything else. 

The Secretary (reading:) — 

February 15, 1895. 
The Fire Underwriters'' Association of the Pacific : 

Gentlemen and Friends: — My connection with the fire insurance busi- 
ness upon this Coast is not such as to entitle me to continue that membership 
in your Association which began sixteen years ago, and I therefore resign 
the same. 

Assuring you of the great pleasure which said membership has given me, 
and wishing you abundant prosperity as an organization and individually, 
I remain, 

Yours truly, 

E. W. Carpenter. 

The President — Gentlemen, what is your pleasure? 

Mr. Hillman — Mr. President, I move that the resignation of Mr. 
E. W. Carpenter as an active member, if such be the proper term, 
be accepted, and that he be elected to honorary membership in the 

Mr. Butler — I think that that question should be divided, Mr. 
President. First, the resignation should be acted upon and then 
the question of honorary membership considered. 


The President — There being no objection we will divide the ques- 
tion. The resignation is before you. All who are in favor of accept- 
ing the resignation will please signify it by saying aye. Contrary, 
no. It is carried. 

Now for the other part of Mr. Hillman's motion, that Mr. Car- 
penter be elected to honorary membership. 

Mr. Gunnison — I move that the Secretary be instructed to cast 
the vote for the Association, if it can be done according to the con- 

The President — If it becomes necessary in order to be legally done 
this can be followed up by a vote of the Association or election com- 
mitte. Are you ready for the question? 

Mr. Edwards — I would like to see some provision of our constitu- 
tion that would permit members who have been so faithful and active 
in the service of this organization, to continue their membership, 
even though they have retired from the insurance business. It is 
not often that we have members who are as active and energetic as 
Mr. Carpenter. In fact, I do not recall any member who has done 
more, and I heartily second the motion, or the suggestion rather, 
that Mr. Carpenter be elected an honorary member, and only regret 
that the constitution will prohibit us from continuing him as an 
active member. 

Mr. Gunnison — While I am thoroughly in accord with all that 
Mr. Edwards has said, still I think it would be a bad precedent 
to establish such provision, for the reason that we require certain 
qualifications for membership. I imagine that when those qualifica- 
tions cease, then the membership could no longer exist. 

Mr. Butler — I think these remarks are very appropriate, and 
in order. This is a sort of a trade guild. It has its trade marks 
upon it most undoubtedly, and when a man ceases to be connected 
with us I think it very proper that he should drop out, unless his 
very conspicuous and eminent services call for recognition. I believe 
that recognition may always be expected at the hands of this Asso- 

I do not think we lack in gratitude to those gentlemen who serve 
us faithfully. When a man has done as well and ably as Mr. Car- 


pouter he can command always a unanimous vote of this Association. 
It is better to leave this in its present condition, thus avoiding 
possible difficulty or injury in the future. In its present shape we 
have everything in our own hands. I think it a safe place to 
leave it. 

Mr. Argall — In a matter of this kind it would seem to me a more 
gratifying compliment were the opinion of the meeting to be obtained 
by acclamation rather than by having the Secretary cast the ballot. 
I offer that simply as a suggestion. 

The Secretary — I would state this: that Mr. Carpenter and myself 
had some conversation on this very subject, and it was his desire that 
the resignation should take effect, and that, if we wished to confer 
upon him honorary membership, he would appreciate it. But he 
spoke particularly of the precedent that would be established, and 
did not care to have it done in his case. 

The President — We have digressed a little from the matter of 
Mr. Carpenter's honorary membership to discuss the provisions of 
the Constitution. However, the question now before you is with 
regard to the election of Mr. Carpenter to honorary membership. 
Before putting the question to a vote, I want to say I feel that the 
services Mr. Carpenter has rendered this Association are of such 
value and character as to fully entitle him to such election. He has 
always been a loyal and faithful member, and has contributed so 
much to our interest, enjoyment and profit, that it seems a very 
proper thing for us to do at this time. All favoring the motion will 
signify it by saying aye. Contrary, no. 

The motion is unanimously carried, and the Secretary will attend 
to the formalities. 

The President — The reports of the Secretary and Treasurer are 
now in order. 

The Secretary — I will announce the unanimous election of Mr. 
Carpenter as an honorary member of this Association. 

(Reads Secretary's report.) 



To the President and Members of the Fire Underwriters' Association of the Pacific: 

Gentlemen :— I beg leave to submit herewith my annual report as Secre- 
tary of the Association. 

At the commencement of the year of 1894 we had a net enrolled member- 
bership of one hundred and eighty-five members. During the year eighteen 
were admitted, making a total membership of two hundred and three active 
members. But I am sorry to report that during the year the membership 
has been reduced from the latter figure by reason of resignations, those 
being dropped for non-payment of dues, also one death, so that .the active 
membership at this meeting is one hundred and ninety-seven, thus showing 
a net gain of twelve members. 

We have held five meetings during the year, omitting the one this morn- 
ing. The average attendance has been ten and would be considerably 
augmented if we had included the meeting referred to. 

We were in hopes that this annual meeting we would be able to record 
no deaths, and it is therefore with sorrow that I announce that during the 
year our associate, Frank H. Swett, passed away. 

The affairs of the Association appear to be in excellent condition, and 
while we did not succeed in increasing the membership as had been our 
purpose, yet the admission of eighteen to our ranks is indeed a subject of 

Those dropped for non-payment of dues, together with some of the resig- 
nations, were not in consequence of a desire to leave us, but more especially 
because a number of them had changed their positions, thereby becoming 

It would appear to me to be wise to place on the Election Committee only 
those who are in a position to be in the city regularly, otherwise it is quite 
difficult at times to obtain the required number of votes. 

Very respectfully submitted, 



The President — You have heard the report of the Secretary; if 
there are no objections, it will take the usual course. 
The Secretary — (Reads financial report.) 


San Francisco, Feb'y 19th, 1895. 
To the President and Members of the Fire Underwriters' Association of the 
Pacific : 
Gentlemen : I beg leave to submit my annual report as Treasurer. 


Cash on hand $ 63 55 

Received from dues 899 00 

Received from admission fees 120 00 


Received from sale of badges 28 00 

Received from sale of proceedings 26 50 

Si, 137 05 


Badges 30 00 

Salary Secretary 100 00 

Banquet Committee 13 50 

Library " 45 15 

Delivering notices, etc 2 20 

Postage 5 90 

Printing, Payot, Upham & Co 17 95 

" Dutton & Co 3 50 

11 engraving, etc., Payot, Upham .... 13 00 

" acct. of '93 10 50 

" acct. of '93 14 75 

" Stanley & Co 11 25 

" Stanley & Co 12 75 

Reporting annual proceedings 70 40 

Printing " " 265 00 

Delivering notices, etc., five meetings 10 00 

Expressage on proceedings, etc 5 20 

Sanborn, Vail & Co. , framing 3 45 

Entertaining Clerks' Association 50 00 

Elevator for same 5 00 

Incidentals 2 60 

Delivering notices, same 1 25 

Floral piece of F. H. Swett 10.00 

Delivering two notices of funeral of F. H. Swett 2 50 

Fireman's Fund prem. '94 4 85 

Printing letter of F. H. Swett 1 75 

Reprints of Smalley's paper 5 00 

Printing, Stanley & Co 9 00 

Althorp & Bahls, binding 10 60 

Fireman's Fund prem. '95 4 85 

Telegrams 1 30 

Envelopes, etc 2 50 

$746 00 

Deliv. notices, clerk's ent 1 25 

$747 25 $747 25 

Balance £389 80 

(Applause. ) 

The President — Gentlemen, you have heard the report of the 
Treasurer, which I believe has been duly audited? 

The Treasurer— Yes, sir. 


The President — The report of the Treasurer has been read; if 
there are no objections, it will take the usual course. I am sure you 
all feel very much gratified at our financial condition. 

We will now have the report of the Executive Committee, Mr. 
Herbert Folger, Chairman. 
Mr. Folger — (Reads report:) 


San Francisco, Feb'y 19th, 1895. 
To the President and Members of the Fire Underwriters' Association of the Pacific, 
San Francisco, Cal. 
Gentlemen : — In accordance with the usual custom the Executive Com- 
mittee has audited the books and accounts of the Treasurer for the past 
year. We find them to be well and truly kept, and the balance on hand 
agrees with the Treasurer's statement, which has been presented to you. 

As being of special interest, we submit a table comparing the receipts 
and expenditures for 1894-95 with the preceding year : 


1893-4. 1894-5- 

Balance $ 40 91 $ 63 55 

Dues 902 50 899 00 

Admission fees 105 00 120 00 

Badges 46 00 28 00 

Sales of proceedings 17 00 26 50 

$1,111 41 $1,137 °5 

Salary of Secretary $ 100 00 $ 100 00 

Library 100 80 65 45 

Banquet deficiency 6 15 13 50 

Printing 179 91 97 70 

Reporting and printing proceedings .... 484 00 335 40 

Addressing notices, etc 35 00 17 50 

Expressage and postage 21 25 12 40 

Entertaining Clerks' Association 55 00 

Incidentals 10 15 5 10 

Tributes to deceased members 35 75 15 20 

Taxes 28 85 

Badges 46 00 30 00 

$1,047 86 $747 25 

We congratulate the Association on a very handsome showing made by 
this comparison. It will be conceded that the printed report of our last 
annual meeting was quite up to the standard of any previous year, although 
it cost $150 less than the report for 1893. Owing to the smaller number of 
meetings, a reduction has also been made in our printing bills of about $80. 


The expenditure for the library account is small, and we believe this can be 
increased, with corresponding profit to the Association. The entertainment 
given to the Clerks' Association was considered a marked success, was not 
unduly expensive and should be repeated. We have no comment to make on 
other items of expenditure, save that we are of the opinion that the honor- 
arium allowed the Secretary should cover any incidental expense incurred 
in having meeting notices delivered, envelopes addressed, etc., although a 
precedent has been established for charging for these items during the past 
few years. Now that the membership of the Association has so increased 
that the annual dues are likely to exceed the ordinary expenses by *ioo or 
►Si 50, the Association is in a position to consider new means of adding to our 
possessions and developing the talent to be found among the younger men 
in the business. 

Several months ago the Executive Committee suggested the propriety of 
inviting members of the Fire Underwriters' Clerks' Association to prepare 
papers upon subjects selected by themselves, to be presented in type-written 
form at this annual meeting, without anything to reveal the identity of the 
writers, under an agreement that the paper possessing the greatest merit 
• should be read at this meeting and printed in our annual proceedings. Two 
papers have been written in response to this suggestion, and while we are 
not at liberty to pass upon them in advance, we are of the opinion that they 
evince considerable effort and interest. We trust that a similar invitation 
will be extended during the coming year, and that a larger number of papers 
will be entered for competition. The English insurance institutes frequently 
offer cash prizes for papers by their associate members, but we believe that 
better results could be secured under the present system. It may be proper, 
however, for the Association to consider the creation of an associate mem- 
bership to be drawn from the ranks of younger men in the profession, whose 
positions, clerical or otherwise, are not such as to entitle them to active 
membership even though they may have seen many years of service. If 
this should be seriously considered, it ought to be required that associate 
members should only be admitted after giving good evidence that they are 
entitled to recognition. The English institutes are also in the habit of con- 
ducting yearly examinations in branches of knowledge allied to fire insur- 
ance interests, offering prizes as well for the best series of replies to the 
questions submitted during the examination. While we are not prepared 
to recommend this, it might be well to encourage the preparation of papers 
on a special subject, such as the hazards of a particular business. 
Respectfully submitted, 


The President — You have heard the report of the Executive 
Committee, gentlemen; what is your pleasure concerning it ? 

Mr. Devlin — I move it be received and placed on file. 
Seconded and carried, 


The President — I presume the suggestions made by the Executive 
Committee will have to be taken up by their successors. 

The Library Committee, Mr. A. J. Wetzlar is Chairman, but 
does not appear to be present. I met Mr. Wetzlar this morning and 
he stated that he had to attend a loss meeting, but would be here 
shortly. The only other member of the Committee present is Mr. 
A. G. Dugan. 

Mr. Dugan — I have not had an opportunity to confer with the 
other members of the Committee, so must ask to be excused. I have 
no report to make. 

The President — I think Mr. Wetzlar will have a report when he 

According to the programme, the next order is the President's 
address, but before delivering it I desire to introduce to the members 
of the Association, Mr. William Haitz of Seattle, who is visiting with 
us to-day. We are glad to have Mr. Haitz with us. I believe all 
others present are members of the Association. 

The President — (Reads.) 

Member* of the Fire Underwriters' Association of the Pacific: 

Gentlemen : It is with unnalloyed pleasure that I greet you to-day at 
this opening session of our 19th annual meeting. Time would not suffice to 
recall nor would it be possible for any one to recount the benefits of our 
yearly gatherings. Many a special agent has been helped over a thorny 
path by what he has heard here or read in our printed minutes. The man- 
ager and the experienced field man may learn much by the exchange of 
views and experiences here, but to the novice this Association is a school, 
a college, a university, where he may by diligence and attention profit by 
the experience of others at practically no other cost. 

I am free to say that a careful study of the proceedings of these annual 
meetings would furnish a liberal insurance education to any intelligent 
young man. It cannot be gainsayed that on these occasions we indulge in 
more or less theory, but our practices would be very disjointed were it not 
for the theories behind them ; hence it is well to theorize. Many of us owe 
what little success we may have achieved not to any special endowments, 
not to any unusual circumstances, not to any "push" or "pull," not to any 
influence at headquarters, but to integrity of purpose, application and 
strict attention to business, energy and intelligence in the use of what 
little knowledge we may possess, never missing an opportunity to learn or 
to teach, for a man cannot develop a broad and good character who is ever 


absorbing and never giving out. Physicians have a high standard of ethics, 
and a man who discovers a remedy and patents it or keeps it a secret is re- 
garded a quack. Unfortunately many are not willing to apply to business 
this same standard of ethics, but I give it as my opinion that if we desire 
to make the most of our business life, we must do it by getting and doing 
all the good we can. That narrow view of life which excuses gross selfish- 
ness and even questionable methods of business does not result in true 
success. Broad Christian principles underlie the best results of this or any 
other age. At most life is but a span ; we cannot live here always, if we 
would. Therefore why should we hold within ourselves that which would 
be of value to our fellows. We have it within our power to ennoble the pro- 
fession to which we are devoting our lives. 


The lazy man has no place in the insurance business — there is too much 
to be done— and laziness cannot be tolerated.. We must not be satisfied 
simply with collecting premiums and paying losses. The theory that we 
must take the risk as we find it and fix the rate accordingly is in the 
abstract correct, but we are more than insurance men — we are citizens and 
owe to the community as much as any other class of men. The tre- 
mendous fire loss, estimated in 1892 at $132,000,000, in 18.93 a ^ $156,000,000, 
and in 1894 at $128,000,000, is simply appalling and is such a drain upon the 
business resources of the country as should cause every good citizen to stop 
and think what can be done to reduce this terrible waste. To this matter 
therefore we should give our close attention. We should study the causes 
of fires and seek to prevent them ; the most approved methods of fire pro- 
tection, and encourage their introduction and use ; modern architecture and 
construction, and favor laws to regulate it ; familiarize ourselves with fire 
proofing materials, the products of petroleum, electricity, that great and 
little understood force and hazard, and in fact everything that has a bear- 
ing on fire waste. I contend that our business is not simply to take the 
hazard as we find it and charge for it, but as good citizens to reduce the 
hazard and thereby save to the wealth of the country vast sums of money. 


During the past year the Association has enjoyed a good degree of pros- 
perity — our membership has increased and we have a very handsome cash 
balance (with all accounts paid) as you have already noted from the reports 
read. A part of the surplus might be expended with profit upon our 


Death entered our ranks but once, but he struck at a shining mark and 
took from us Mr. Frank H. Swett, a valued member of this Association — 
genial, capable, courteous, always ready to oblige a fellow- worker or to con- 
tribute to the profit and pleasure of this Association. You will remember 
he was with us at our last annual meeting and read a very able paper on 
''Insurable Interest." A committee will present for your adoption suitable 
resolutions in respect to his memory. 



I think the change from monthly to quarterly meetings was a mistake, 
and that the interests of the Association would be better subserved by 
more frequent sessions. There are often matters of importance which 
should be taken up for consideration, but which are forgotten or lose inter- 
est in the interim. 


I also believe that the committee plan of electing new members is not 
satisfactory, and I think we are not as likely to give careful consideration 
to the eligibility and desirability of applicants for membership under the 
new as under the old method. 


Pursuant to an order passed at the first quarterly meeting, we tendered 
a reception to the Clerks' Association of this city, on the evening of Sep- 
tember 6th, 1894. Both organizations were well represented, there being 
from thirty-five to forty members of the Clerks' Association present. Ad- 
dresses of welcome and response were made, after which a number of topics 
were treated by members of each Association. At the conclusion of the 
very pleasant and profitable evening refreshments were served. I un- 
hesitatingly recommend a similar reception be given annually, and that the 
members of this Association interest themselves in being present. These 
young men are eventually to succeed us in our several positions, and we 
owe it to ourselves and to them to encourage and help them all we can. 


This time honored organization is dead. It is an unwritten law that we 
should speak well of the departed, and for the most part we can conscien- 
tiously do so in this instance, for while union methods have deprived us of 
self reliance in the matter of making rates, it is gratifying to note, how- 
ever, that taken as a whole union rates have yielded a fair profit, even 
though that profit may all have been made in certain favored localities. 
After all, profit is the great desideratum in this business. 

No subject is more frequently considered. In fact, every hour of the day 
we are called upon to decide the amount we will carry on a particular risk. 
No subject will bring out more diverse views than the "Theory of Lines," 
upon which we will have several papers and I presume considerable discus- 
sion at this session. The puzzling thing about it is that men advocating 
diametrically opposite theories come out with similar results at the end 
of the year. 


For the mathematically or statistically inclined here is an opportunity 
to gratify a taste for research. Some one by considerable study has cal- 
culated that in New York state 22 per cent, of the losses arose from ex- 
posures. Applying this ratio to Coast losses, we find that $1,143,560 would 
be the loss attributable to exposure fires. The ratio of losses to premiums 


on the Coast in 1894 was 49.7 per cent. The exposure loss therefore at the 
same ratio would indicate premiums collected for exposures £2,300,000. Now 
the question arises, does the same ratio obtain here, and if so, did we col- 
lect on this Coast solely for exposure charges 82,300,000? If not, our rates 
are incorrect in this particular and we are charging too much for unex- 
posed risks and too little for exposed risks. 


Here again is an opportunity for speculation or perhaps for figures. How 
many of us prefer stocks in brick buildings to the buildings themselves? 
How many are just as willing to take stocks as buildings? How many 
prefer buildings to stocks? I contend, gentlemen, that the rates should be 
so arranged as to make all risks equally desirable. Do you suppose that 
when that result is attained the millennium will have been reached ? Then 
let us hasten on to the millennium. If risks are properly understood and 
rated all will be equally desirable physically. Ignitability, combustibility 
and susceptibility, as stated by the chairman of the Universal Mercantile 
Schedule Committee, constitute the basis of the rate. These three points 
must certainly be considered in arriving at the rate which the risk itself 
should command. Then deficiency and exposure charges should be added. 


Here is a relic of by-gone days. Maximum rate 10 per cent. Why in 
the name of common sense stop at 10 per cent, if the risk is worth 15 per 
cent. ? Is there a magic spell about that point? No, the rate must be fixed 
correctly, for on the rate hang the permanency, prosperity and comfort of 
our business. The margin of profit is so small that if it can be exactly 
divided over each class of business rate-cutting, excess commission and 
bad faith generally will cease. Inequality in rating builds up bad practices 
and non-board companies. 


Many offices have for years classified their business under a hundred 
or more headings and such companies have at least some advantage over 
those offices which do not classify at all, but there is such a wide difference 
in judgment both as to risks and lines that I sometimes wonder if the 
classifications of one office prove anything of very great value. The advance 
from the tallow candle to the coal oil lamp, then from the coal oil lamp 
to gas, and then from gas to electricity, affected in each case a change in 
physical hazard ; the introduction of the three-fourth loss or value clauses 
affected the moral hazard, and the adoption of the co-insurance clause 
affected the amounts carried and the rates secured on certain classes of 
business, automatic sprinklers have also been introduced, disturbing rates 
and lines. Classification methods meantime have changed but slightly and 
in the main the work goes on in the same old way. Men differ so much in 
judgment both as to the desirability of certain classes of risks and as to 
lines carried that it is fair to ask, Is classification of any great value unless 
carried on in such a manner as to show all premiums received on all 
classes of risks and the losses thereon by classes in each district ? I am 


satisfied we have lost in the past ten years the best opportunity that in- 
surance men ever had to classify the whole business of a department. 
This could have been done without divulging individual experiences con- 
cerning which some men seem to be very jealous. 


So much has been written upon this subject that I will only refer briefly 
to a point or two. As members of this Association in making agency ap- 
pointments we should in a calm and dignified manner consider the best 
interests of our companies, not for a day or a year, but for a decade ; we are 
too apt to look at present advantage rather than to long continued prosperity 
in the selection of the men who are to represent us. One of the most dis- 
couraging features of the business is that a man cannot become too rank, 
too dishonest, too disreputable to get the agency of some company. No mat- 
ter if he has actually robbed his principals, collected and appropriated to his 
own use the premiums of his companies, some special agent will appoint him 
without regard to his past record with the hope of stealing from his com- 
petitors the business, the premiums on which have been stolen by the 
agent. I contend, gentlemen, that we ought to establish a higher standard 
of ethics in this particular. 


I have no doubt the committee appointed at our last meeting to consider 
this subject will present to you a clear and comprehensive report. It would 
seem that banks, loan companies and private moneylenders should have the 
protection which the most iron-clad mortgage clause can give them. The 
only question for the companies to consider is under what conditions and at 
what rates this protection can be granted. Certainly a risk is worth a 
larger rate where all the rights of the company as protected by the printed 
conditions of the policy are waived than otherwise. Hence it seems to me 
the only solution of the question of form of mortgage clause is the rate, and 
where the mortgagee insists upon a policy which eliminates the cancellation 
and contribution clauses, he should pay a premium large enough to warrant 
us in assuming the risk. A schedule of charges for the elimination or in- 
sertion of certain conditions might be arranged. 


So much has been said and written on this subject that I do not think I 
ought to take up your time in its further consideration. I desire, however, 
to put myself on record as believing our present system unfair and inequit- 
able. The rate should always be fixed upon the basis of full insurance so 
that where less than full insurance is to be carried the rates would be regu- 
lated by the proportion of insurance to value of property. Our whole system 
will be imperfect until based upon this or a similar plan. The arguments 
and methematical demonstrations in this regard are no longer needed ; they 
are familiar to all. 


This is another threadbare subject, but the tremendous fire waste re_ 
f erred to in another part of this address fully justifies the statement that 


it is not only the right but also the duty of the State to investigate the 
causes of fires. Many fires originate from carelessness ; many others from 
poor construction, and still others from criminality. To a certain degree 
the State can reduce the first ; it can have absolute control over the second, 
and can proceed against the third as it does against all other infractions of 
law. I think it is the duty of the members of this Association to encourage 
and promote public opinion on this subject, or as we sometimes say, "work 
up public sentiment" to a point where proper laws maybe enacted along 
this line. Certainly the matter is of sufficient importance to engage the 
attention of our statesmen. 


Such organizations now exist throughout the world where there are any 
considerable number of companies operating and seem to be essential if a 
profit is to be realized. Those non-board companies which make money do 
so, I am convinced, because there are Tariff Associations which maintain 
fairly good practices and rates, and thus while conserving their own inter- 
ests make a profit possible to other companies not affiliating with them. 


It will probably not be out of place to refer to this question here, though 
many of our members may be so-called non-boarders. In fact in this organiza- 
tion discussion takes a wide range, while at " Board " meetings discussions 
are one-sided. As for myself, I am compelled to say that I do not like the 
necessity of enforcing non-intercourse, yet I can scarcely see how it can be 
avoided so long as there are companies which will take advantage of the 
rules, rates and restrictions of tariff associations to forage upon the busi- 
ness of tariff companies. 1 know from personal experience that this is what 
non-board companies do, for I began my insurance life with a non- board or 
rather "little" board company, and while we were not permitted in the 
agencies with some of our larger and stronger competitors, still we made 
money, because, not being bound by their board rules or rates we cut a little 
under them on preferred classes or paid a little extra commission to brokers 
and agents. Of course the board companies did not like our kind of compe- 
tition, and from time to time made it " hot " for us. It is strange how averse 
some men are to taking their own medicine. Finally mutual concessions 
were made and we came together in the old Pacific Insurance Union, which 
served us very well for some ten years. Now we are in trouble again, and 
are employing the same tactics, though with a little different personnel, and 
let us hope some amicable and fair settlement of our difficulties may be 
reached. Experiences of the past referred to here may be valuable to 
us all. 

By the way, have you read the pledge of the new Board of Fire Under- 
writers of the Pacific. It is iron-clad and can scarcely be misconstrued — 
and I do not see how a man who signs and wilfully violates this agreement 
can retain his own self respect and certainly cannot that of his con- 

president's address. 15 

"I hereby agree with each and all of the signers of this agreement to 
observe in good faith, without evasion or mental reservation of any kind, all 
of the provisions of the constitution and rules and regulations of the Board 
of Fire Underwriters of the Pacific as they now are or may be hereafter 
constitutionally amended, holding myself faithfully to the spirit as well as 
to the letter of this agreement. My signature is also understood as binding 
upon my associates in management, special agents and all other employees 
of my office. Also, that I will not regard myself as relieved from any obli- 
gation assumed, notwithstanding the violation of such obligation by another 
member, except upon written resignation sent not less than fourteen days 
nor more than twenty-one days after service of written notice of my inten- 
tion to resign, and until after all assessments shall have been paid, except 
that upon demand agreed upon by a majority vote of the entire membership, 
such vote being confirmed at a subsequent meeting not less than five days 
later, my name may be stricken from the roll without further notice." 


The Eastern insurance press at this time is devoting a great deal of 
attention to the matter of lump settlements. It seems that this method of 
settling losses has been practiced, greatly to the dissatisfaction of the 
insurance editors, if not managers, in many parts of the country. It is 
claimed that much larger sums are paid claimants under the lump settle- 
ment plan than would be under close adjustments. It is estimated that at 
least 5 per cent, of the total amount paid for losses in the United States, 
some $5,000,000, is over and above what is actually due claimants. It is 
estimated that this money improperly paid to claimants would enable the 
companies to materially reduce rates or increase dividends. Certainly lump 
settlements should be discouraged. 

In this address I have probably digressed too far from the line of proper 
discussion from the platform. 

You are to be favored with papers from a number of members who have 
not written before. I have understood it to be the object of this Associa- 
tion to develop talent. You will all readily appreciate the fact that my task 
has been much more difficult on account of the recent disturbances in our 
business. Most of the special agents have been kept far from home and 
hard at work and it has been almost impossible for me to get enough of them 
to consent to write to furnish you with a programme for this occasion. We 
are, however, to have the pleasure of hearing a number of very important 
topics discussed and I sincerely hope that the meeting will prove to be one 
of the best in the history of our Association. 

I beg to thank you for your very considerate attention to these rambling 

(Applause. ) 

Mr. Folger — In pursance of the time-honored custom, I move that 
the usual committee of three be appointed by the President to consider 
the recommendations in the address. 


Mr. Butler — Second the motion. 

The President — You have heard the motion, gentlemen. I would 
prefer that you appoint your own committee, however. 

All who are in favor of thus appointing such committee will signify 
it by saying aye. Contrary, no. Carried. 

I would be very glad, indeed, if the maker of the motion would 
name the committee. 

Mr. Folger — It is customary for the President to consider the 
composition of the committee, and I would suggest if it is announced 
after the noon hour, it will be entirely satisfactory. 

The President — I would be very glad to have you suggest the 
names of the committee. 

Number three on the programme will be passed over until after 
the noon hour. The next number is " Arson Committee Work and 
Experience," by Mr. George E. Butler, chairman of that committee, 
who for a great many years has been fully conversant with its details. 
We are glad to hear from Mr. Butler. 

Mr. Butler — It frequently takes time to get an arson case fixed up. 
No doubt this is like one after it is fixed — it will take a very short 
time to go on. (Reading:) 




The Board of Fire Underwriters of the Pacific hereby offer a reward of 

Dollars, for the arrest within six months from 

this date, and the conviction of any person or persons found guilty of the crime 
of Arson, hy being connected with the fire. 

San Francisco, 189 

By request of 

Committee on Arson. 

Mr. President and Gentlemen: 

Upon invitation to prepare and deliver some remarks on the subject above 
mentioned, an endeavor is now made to give some brief account of facts, 


ideas, and workings of this committee, whose responsibilities are of a some- 
what peculiar character. 

It may not be possible to make this paper very interesting when com- 
pared with other subjects which are brought before you, but there is an 
importance belonging to it, which may be increased largely in your estima- 
tion after you are made aware of the value which can only attach to it from 
personal knowledge. 

On the 30th of January, 1875, a resolution was passed by the Board of 
Fire Underwriters, that the committee on arson be authorized to offer a 
reward not to exceed $1,000, for the arrest and conviction of any person 
guilty of arson, in such places on the Pacific Coast as they may think 

It has been deemed by the committee a part of their duty to fix the sum 
offered to suit the exigencies of each individual case, and just as no reward 
is offered except at the written desire of a contributor to the arson fund, 
so the amount of each reward is usually agreed upon in accordance with the 
views of the member making requisition. While the committee are em- 
powered to name so high a sum as $1,000, it has been deemed advisable in 
but very few instances and under peculiarly aggravated circumstances to 
place the figure at more than $500, while every purpose has apparently 
been attained by the offer of sums ranging from $100 to $350. Contrary to 
the impression prevailing amongst some special agents and not a few 
country agents, there is no standing reward remaining open, and the com- 
mittee have not possessed the power (nor desire) to have a standing reward 
to fit all cases of incendiarism. Only upon application of a member, and in 
specific cases, does the committee grant or publish any offer. The reasons 
for this course are obvious, and the principal one is probably all that is 
necessary to furnish an explanation ; viz., the Board of Fire Underwriters 
have no wish to supersede the regular action of the laws of the country. 
The crime of arson should be punishable in like manner with other crimes, 
and in the ordinary condition of things efforts should be made by law 
officers to the end that justice may be meted out to the offenders. The 
reward which may be earned in those instances where it is offered, is only 
intended to stimulate their exertions for our special protection, and, gen- 
erally speaking, the publication of a reward acts as a deterrent to criminals, 
who hesitate to apply the torch when they know such an inducement exists 
for their detection and prosecution. 

Several remarkable instances have occurred to fully prove the truth of 
the latter remark. Many years ago incendiarism was rampant in Portland, 
and for months the sleep of many underwriters in this city must have been 
somewhat disturbed by the expectancy of bad news the next morning. 
The publication of the extreme reward in this case was deemed advisable, 
and proved to be quite effectual. In similar manner the torch of the in- 
cendiary seemed to be blown out after doing much damage in Santa 
Clara county, at numerous farms situate some score miles from San Jose. 
After the reward of $500 was calculated, the attempts came to a stop, as 
was also the case in the summer of 1894 in the neighborhood of Gait, Lodi 
and Stockton. 


It is not always confidently expected that the district attorney in every 
locality will prove competent to procure the conviction, even when the 
evidence seems to be complete, and in such cases it is evident that a re- 
ward must be offered, in order to procure the services of an experienced 
attorney to secure conviction. 

An instance once happened when the chain of evidence seemed ample on 
the side of the prosecution, but the district attorney had a partner, and it 
proved absolutely needful to allow him a reward of $100 for conviction, in 
order to obtain it, which was rather exasperating to the committee, but 
they had to submit, that the desired end might be attained. 

While the committee endeavor to conform with the exact resolution of 
the Board of Underwriters, it is sometimes advisable to lay before the 
members of the arson fund, circumstances under which some indemnity 
should be given for valuable assistance. For example, the marshal of a 
large town was possessed of such a desire to punish fire-bugs, and was so 
successful in his arrests, that upon one occasion where he had expended 
much time, labor and some money to accomplish his object, upon suggestion 
of the chairman of the arson committee, the Board unanimously voted him a 
donation of $100. Another time, a detective living in one of our fruit valley 
cities undertook to earn a reward, and was certain in his knowledge of the 
identity of the criminal. In the pursuit of him he scoured the country, 
including several towns in three different States and Territories besides 
California, succeeding at last in bringing his prisoner home. Upon the first 
trial the jury disagreed ; at the second trial overwhelming evidence was 
forthcoming, and little doubt remained as to the verdict. From what was 
afterwards learned, some of the jury may have thought it a pity to ruin a 
man and cast a stigma upon a respectable family for so small a matter as 
burning out and trying to earn a few good dollars from insurance companies. 
Lengthened discussion of the subject led to an acquittal. Upon the report 
of the detective, detailing his work and the attendant expenses, and also 
upon the recommendation of several members of the Union, a suitable 
reward was paid on this occasion. 

Only once in the history of the arson committee have they made a request 
for compensation where the fire did not take place or was not attempted. A 
sum of money was sanctioned, upon the written request of all the members 
of the arson committee, the general manager of the Pacific Insurance Union, 
and also its attorney. 

This was a curious case and one that is impossible (for good reasons) to 
fully describe in detail, but the actual fact was that a very large amount 
of insurance had been obtained upon property, which, upon investigation, 
proved to be entirely unsalable and utterly unlikely to earn a fractional 
interest upon its cost. The closest possible scrutiny proved that the infor- 
mation received was reliable, and in this solitary instance the committee 
was willing and cheerful in making a certain payment. 

One of the strange cases that came before the attention of the committee 
was that of a learned professor in the college of a California town, who 
burned his property on three different occasions. Twice he escaped scot- 
free, but on the third he was not so fortunate. 


Leaving his residence in the country, and giving out his intention to 
stay for some time in San Francisco, he remained there a while, and then 
adopted the method of proceeding to another town fourteen miles distant 
from his house, and where he was unknown. Hiring a saddle horse, he 
went in the direction of his property, a short distance from which he tied 
the animal. On his return to get the horse he found that he had broken the 
rope and strayed. During the interval the premises had been fired. But 
for the steed breaking loose, this accomplished scoundrel would probably 
have gotten away again, but the accident was his betrayal, and the result 
was twelve years in the State Prison. 

An extraordinary cause to suspect incendiarism once arose from the dis- 
like of some members of a religious denomination to the erection of an organ 
in their place of worship, and but for an untoward mishap it seemed tolera- 
bly sure that a conviction would be secured. 

Actuated by revengeful or malicious motives persons have sometimes 
addressed communications to the arson committee, designing to throw the 
odium of intentional fires upon the assured ; discharged employees have also 
made similar attempts to influence the committee. Usually there has been 
small difficulty in uncovering these insidious attacks, though they require 
rather delicate handling to avoid unpleasant complications. 

During the 19 years ending April, 1894, 535 rewards were issued, amount- 
ing in all to the sum of $234,350, of which $27,850 w r as paid as the result 
of obtaining 82 convictions. The aggregate sentences were 493 years, 
being an average of 6 years for each conviction. 

The claim for a reward is considered perfected by evidence of arrest 
being furnished to the committee, certified copy of the trial and verdict, 
together with the receipt signed by the warden of a state prison, acknowl- 
edging that he has the criminal in durance, for the purpose of serving out a 

Rewards are sometimes claimed by various persons, and it has been 
necessary in some instances to take a bond from the party to whom the 
reward has been paid, in order to avoid litigation. 


I can state further that in the several cases where we have paid 
rewards, the party that furnished the bond has always apparently 
proved to be the correct party, because we never had any trouble or 
litigation over a claim. 

One other matter might be brought up in this paper, but for the 
time necessary to do it. When the arson committee have the neces- 
sary leisure we will probably look carefully into the laws of various 
States and Territories of the Pacific Coast, with a view to taking* 
steps towards procuring some changes which will be highly bene- 
ficial to insurance companies. In one or two States the crime of 


arson is a most difficult one to punish, owing to defects in the laws, 
especially in Washington. (Applause. ) 

The President— Gentlemen, this paper contains the information 
that I wished to develop through the aid of Mr. Butler, and perhaps 
knowledge that none of us possessed. The number of convictions, 
the aggregate number of years for which men have been sentenced, 
the amount of money expended by the underwriters, and the method 
by which these offers of reward may be secured is all very interest- 
ing. If any questions are to be asked or any remarks to be made in 
connection with this paper, we will be very glad indeed to have 
them, at this time. 

Mr. A. D. Spencer — I wish to speak in regard to the suggestion 
made by Mr. Butler as to better legislation. One of our very local 
agents in Washington, who is now a member of the Washington 
legislature, has introduced a bill during this session to improve the 
conditions in that State. And only a few days since he told me he 
had every reason to believe that the bill would pass. I have not seen 
a copy of this bill, so that I cannot tell just how near it comes to 
meeting the requirements, but I presume it will improve matters 
very materially. 

Mr. Fogarty — I might say in that connection, I saw Mr. Park- 
hurst of Portland a few days ago. He had just returned from a visit 
to Olympia in connection with legislation pending in the arson mat- 
ter, and he had copies of two bills that had been introduced. One I 
think, that Mr. Spencer refers to here, was that of Mr. Foster of 

Mr. Spencer — Mr. Hanford. 

Mr. Fogarty — Mr. Hanford, of Seattle? 

Mr. Spencer — Yes, sir. 

Mr. Fogarty — Well, Mr. Foster of Spokane was advocating one 
bill which was very complete in its provisions. Regarding this bill 
Mr. Parkhurst expressed much satisfaction, and he stated that they 
had every assurance that the much needed legislation in that State 
would be passed at this session. 


Mr. Gunnison — Mr. President, I would like to mention one point 
in regard to Mr. Butler's statement. He evidently referred to a 
case with which I was connected. The officer went over several 
States, and said that at last he found the guilty man in Arizona, and 
received a requisition from that State. He stated that the prisoner 
had a second trial and was acquitted. That was a fact. Everything 
was quite correct as far as he went, but fortunately we had a district 
attorney in that county who asked for a third trial, and the defend- 
ant was found guilty on that trial, and sentenced to eight years in 
the State's prison. But that was not all. His attorney asked for a 
stay of proceedings for ten days that he might apply for a new trial, 
and talked about sending the matter to the supreme court, or some- 
thing of that kind. The prisoner attempted to escape, for which 
he received an additional sentence of four years, making his term of 
imprisonment twelve years. 

The President — Are there any more remarks on this subject ? 

The next, number five, is "Plate Glass Insurance." I asked Mr. 
Jno. R. Hillman to write this paper, for the reason that I have 
found that the subject is not clearly understood by most of the 
special agents, and because most special agents come in contact one 
way or another, with this question, and I had no doubt Mr. Hillman 
would give much needed information upon this subject. 

Mr. Hillman — (Reading:) 


Mr. President and Members of the Board of Fire Underwriters of the Pacific : 

Your President, in a recent communication, requested me to prepare a 
paper, to be read at this annual meeting, on the subject of " Plate Glass 
Insurance," believing that there was no branch of the insurance business so 
little understood by special agents in general as that particular class. At 
the time this request was made I decided to not only treat upon plate glass 
insurance, but also to give you some information as to how large plates are 
manufactured ; but, having put off the writing of this paper until the last 
moment, I find now that I have but time to treat of the subject of insurance 

What is plate glass insurance? It is insurance against loss by accidental 
breakage of plate glass, whether plain or ornamental, cut, embossed or 
beveled, but does not cover on window or crystal glass. This class of insur- 
ance is very simple and differs from fire insurance in many points, more 


especially in that there is no danger of getting "too much in a block," and, 
as a whole, there are no difficulties in adjustments. 

Until recent years, companies issued their policies covering plate glass 
for a certain value, the amount being specified in the policy, and in case of 
loss the assured was usually paid the amount so specified; but latterly, 
companies agree to make good unto the assured all loss or damage to the 
glass covered, it being provided in the policy that the value of the glass 
shall be ascertained at the time of breakage, the company, however, reserv- 
ing the right to pay the said value or to replace the broken plate, the latter 
course now being usually adopted, it being more satisfactory to the assured, 
and in a measure, more so to the company, for several reasons : 

First, because by so doing, the assured (who may oft' times be away 
from home) is saved the annoyance and delay in ordering a duplicate plate. 
Again, the glass may be broken in transit, for it is often the case that large 
plates must be ordered from the East, and, in special cases, must be ordered 
and shipped from Europe, particularly so, large bent glasses. 

Undoubtedly a large number present to-day, while engaged in inspecting 
risks in Portland, have noticed the bent glass in the Olds & King building 
of that city, which is the largest bent plate on the Coast, and if broken a 
frame pattern would have to be made and shipped to Europe and a duplicate 
glass sent by sea, the cost of which would be from $750 to $990, transporta- 
tion included. 

As stated before, the value of the glass is no longer incorporated in the 
policy, the company agreeing to "make good" unto the owner, all such loss 
or damage as shall happen by accidental breakage of the glass, such as 
cleaning of windows, storms, runaway horses, falling signs, gun or pistol 
shots, stones, dressing of show windows, burglars, maliciously broken by 
hoodlums, or by those intoxicated, settling of the building, etc., or due to 
any cause beyond his control, excepting that of fire, invasion, insurrection, 
riot, military or usurped power, earthquakes, inundation, the blowing up of 
buildings, blasting operations, or caused in any way by explosives, or by 
being scratched or defaced, or for loss while being glazed. 

As an illustration of how breakages oftentimes occur, I will cite the case 
of a man who, being destitute, applied at the Old and New City Hall for 
shelter and was refused admittance. In turning away, he informed the 
officer in charge that he would not kill or steal, but that they would " take 
him in " before morning. He walked down McAllister street to the Murphy 
building, and seeing two police officers, he immediately picked up a stone 
and threw it with such force as to break one of the largest plates in J. J. 
O'Brien's store. It is needless to say that he was "taken in" and the 
company paid the loss. A workman, while on a ladder repairing the awnings 
of the White House, fell, and the ladder went through two of the large front 
windows. It is impossible to recite all the causes of breakage ; suffice it to 
say that, on an average, there is one loss to every seven policies issued. 

Mirrors, stained and ornamental plates, are also insurable, but the par- 
ticular kind of glass must be so stated in the application and policy; other- 
wise the assured can only recover for the value of plain glass. Jn replacing 


mirrors, the expense of removing fixtures, as in a saloon, for illustration, 
must be borne by the assured. 

In case of breakage, the insurance immediately ceases and the policy does 
not cover the new plate until so endorsed, and then only after the glass has 
been properly set by the glazier, for which a pro rata premium is charged to 
the expiration of the policy. 

Under the terms of the policy, the assured must use all reasonable efforts 
to preserve the glass from further breakage. This is often done by the 
glazier boring a hole at the end of a crack, or by the use of a diamond encir- 
cling the hole, such as a small opening caused by a bullet. In case the glass, 
or glasses, are subject to breakage by reason of decay or wharping of frames, 
alterations and repairs to the building, or the removal of glass, the liability 
of the company immediately ceases, or until said repairs are completed. 

The rates of insurance are 3 per cent, on all plates under $200 valuation, 4 
per cent, on plates valued from $200 to $245, and 5 per cent, for those valued 
at over $245. An additional charge of 50 per cent, of the premium on plain 
glass is made on mirrors, beveled and bent glass. On embossed, cut, lettered 
or ornamental lights, an additional charge of 5 per cent, on the cost of 
embossing, cutting or lettering is also made. As the discount on plate- 
glass varies from time to time, and in various locations, the list price is the 
basis upon which the rates are made. 

The premium on plate glass in dwelling houses or stores ten feet or more 
above the sidewalk is one-third less than on other plates. This applies also 
to an upper light resting on an iron or steel bar, but does not apply when 
resting upon the lower glass. For the use of agents who are ofttimes 
unable to obtain the list valuation of glass, a premium rate book has been 
compiled for each size of glass up to and including those measuring 130x200 
inches, so that if the assured desires to know what it will cost him to insure 
a glass of a certain size, the agent has but to look at his premium book and 
readily give an answer. 

We are often asked why our premium should be made upon the list price 
and not the net price, for the assured or contractor oft' times receive large 
discounts. Our only answer to this is, that were it otherwise, we would be 
compelled to charge a much higher rate; and, again, this discount fully 
compensates the company for the expense of glazing, freight, and other inci- 
dental expenses, besides the actual cost of the glass, and which would 
necessarily have to be added to the rate. The salvage, or broken pieces of 
glass, belong to the company, and when of large dimensions are returned to 
the dealer, for which the company receives credit, and which also compen- 
sates them, in part, for the expense of glazing, as hereinbefore mentioned. 

The rates on the Pacific Coast are uniform, the companies doing business 
here having formed a compact, and, to the best of my knowledge, live up to 
their agreement in every particular. To give some idea as to the value of 
glass, I will state that the plates in the White House, Phelan, Flood and 
Murphy buildings of this city range from $10,000 to $15,000 for each building. 
The front plate of the German Savings and Loan Society's Building is 
valued at about $500 net. 


While the average loss is easily adjusted, yet we are at times compelled 
to deal with men who are exceedingly set in their ways, and if there is the 
slightest imaginary defect in the glass, or in the thickness of the plate, it 
will be thrown back on our hands ; for illustration, I will state that in an 
adjustment which the writer now has in hand, the loss was reported, and 
having the length and width of the glass on our records, as well as being 
stated in the loss claim, we immediately shipped a glass of the proper size, 
which, on its arrival, was declined, the assured claiming that said plate was 
an eighth of an inch thinner than the plate broken, and that, under no cir- 
cumstances would he accept said plate or any plate unless it was full 6-16 

in thicknes ; that we must take them for a lot of d dolts to think that 

we could palm off such a glass on them ; and although they lived in a moun- 
tain town they were fully able to cope with city men, the result of which 
was, that we ordered the glass re-shipped to San Francisco and intend 
sending another plate, this being entirely voluntary on our part, for the 
company does N not agree to replace glass of any particular thickness, all 
glass being ordered and shipped from the factory as quarter glass — that is, 
4-16 of an inch in thickness ; but in a carload lot the glass will be found to be 
all the way from 3-16 to 5-16 in thickness, and possibly one plate in the lot 
might run as high as 6-16, the difference in thickness being occasioned by 
the glass being worked down and polished until each and every defect has 
been removed. A thin glass is of as much value in the market as a thick 
one; therefore, our mountain friends were entirely "at sea" in demanding 
that we should return a plate full 6-16 in thickness, for as stated before, all 
plates are bought and sold as " quarter glass." 

Losses are reported on blanks furnished by the company and are signed 
not only by the policy-holder, but by the agent, who certifies that the glass 
has been measured by a glazier, and also states the sizes of the broken pieces 
or salvage. In the same blank the local dealer gives an estimate as to the 
cost of furnishing and setting the glass complete ; what he will allow for 
the salvage, and providing the company furnishes the glass, what he will 
charge to take the glass from the railroad depot, glaze the same, pack and 
ship the salvage ; also states what he will pay for the salvage, regardless of 
doing the work or furnishing the glass. When this report or claim comes to 
the office complete, it takes but a moment to decide whether to have the 
local dealer replace the glass, or whether it will be to the advantage of the 
company to ship a plate of that size, the freight charges being about one- 
sixth of the value of the glass. 

In measuring glass, care should be taken to get the exact size, including 
a half inch on each side and top and bottom for that portion in the sash. 
Those facing the street are designated as "front lights." When in two 
pieces, they are designated as the "upper front light" and "lower front 
light." If the building is on the corner the lights on the side street are 
described as being "side lights." Glasses in that portion of the show 
window or entrance going into the door are designated as "return to door 
lights." Glasses in the doors are designated as "door lights," and tran- 
soms as "transom lights." 


It is quite frequent that fire insurance "specials" interest themselves 
in behalf of their agents in endeavoring to procure for them the agency of 
a plate glass company. I call this to your attention because there is no 
doubt but that considerable work of this kind can be done by those who are 
continually in the field, and who are desirous of befriending their local 
agents; the commission paid being 15 per cent., no portion of which can be 
given to the assured as a rebate. 

The subject before me being one in which there are few opportunities 
for originalities, this paper is simply a summary of the conditions of the 
policy and instruction sheet to agents, and it is sincerely hoped that those 
who are not familiar with the subject have been benefited. 

(Applause. ) 

The President — Gentlemen, you have heard this paper, if there 
are any questions unanswered, or any remarks you desire to make, 
we shall be glad to hear from you. 

Mr. Hillman — I am asked as to the terms of the policy. I did 
not touch upon that in the paper. Annual policies only are issued 
on the Coast, with the exception that at Victoria, B. C, term pol- 
icies of three years are issued. 

The President — It is only fair to observe that the name of the 
company represented by Mr. Hillman has not been mentioned, and 
all plate glass companies issue standard policies. 

The next, number six, I think we will have to pass until after- 
noon. Mr. Craig is not present, and I regret to say that Mr. Frank 
D. Brown's paper has not yet arrived, although he promised it faith- 
fully, and I think it must certainly come in to-day's mail. We will 
take up one more paper, number seven, "Little Fire Hazards, and 
How to Prevent them, " by Mr. F. H. Porter, manager of the Inspec- 
tion Bureau. This paper has been placed in the hands of Mr. Smal- 
ley, who has been requested to read the same. 

I want to say that Mr. Porter has also arranged for our inspec- 
tion and entertainment a miscellaneous assortment of articles col- 
lected by the Fire Inspection Bureau, and at recess you are invited 
to examine them, especially this wooden candlestick found in a plan- 
ing mill, and a candle set in a piece of kindling wood found in the 
building of the State Investment Insurance Company at the time 
that company was in operation. (Applause.) 


This particular specimen with the rosin at the bottom of the 
candlestick, in a piece of kindling wood, was found in the basament 
of the State Investment Insurance. Company, by the Fire Inspection 

Mr. Fogarty — Did they carry their own insurance? 
The President — Of course not. Mr. Smalley will now read the 
paper prepared by Mr. Porter. 

Mr. Smalley — This paper was handed to me only a short time 
ago, and I have not had an opportunity of reading it. I hope you 
will bear with me. (Reading:) 


Although owning to having devoted, in common with others of our ilk, 
more or less time to theorizing as to the ideal compact, to the best method 
of conducting a general agency to the benefit of both company and manager, 
and to similar weighty matters, "Little Fire Hazards," except that they 
sometimes remind us of the inspection bureau, of wasted opportunities, had 
not particularly engaged my attention, so that, upon receiving the subject 
assigned me, I very much wished to make the familiar answer, "not pre- 
pared." Indeed your President will, I think, bear me witness, that I 
advanced various, and, to me, convincing reasons for being let off, at least 
for a year. I must always harbor a doubt as to whether the firmness with 
which I was held to my promise, did not arise more from the necessity he 
was under of gathering from somewhere a sufficient number of articles, 
than from anv special anticipations from my treatment of the subject in 

A majority of little fires are to be attributed to comparatively few causes, 
the leading ones being matches, doubly effective in conjunction with the 
small boy (recent researches under a bed of a boy in pursuit of an escaped 
nickel cost a leading company $150.), coal oil lamps exploded or upset, defect- 
ive construction, sparks from chimneys, and cigars and cigarettes, in about 
the order named. 

Of these causes all except the sparks and lamp explosions are simply 
another name for human carelessness, and I am convinced that the number 
of lamps that really explode is comparatively few, many of the cases so 
reported being upsets, while the tests of samples of coal oil said to have 
exploded lend support to the presumption that dirty lamps are more to be 
feared than the qualitv of the coal oil used, at least in this climate. A recent 
lamp fire was caused by the family cat upsetting the lamp, fires from 
lamps used for curling irons are more frequent than is generally supposed, 
a thrown lamp is a not infrequent weapon in certain localities, while from 
Salt Lake City hails a fire the cause of which is given as "shooting at the 
lamp," to which is appended the note that he hit it.- A new lamp danger 
arises from the prevailing use of large lamps of the banquet or piano variety, 


which being of metal are not to be feared as explosive, but are much to 
be feared from the great heat developed and the large and inflammable 
shades used. The metal frames supporting these shades are frequently 
soldered together, and the heat, which has been known to soften the glass 
chimney, melts the solder, and trouble begins. 

The careless way in which matches are thrown about leads to some 
curious fires. Sacramento had two fires last year from matches stepped 
upon igniting gasoline, in Los Angeles again the cat did the trick with 
parlor matches, and from San Jose comes a tale of a looking-glass falling on 
matches on a stand and so causing a fire. 

Fires from defective construction rarely arise from errors in design, but al- 
most invariably from poor workmanship ; again, human carelessness. The 
most common defects are in chimneys and flues, fireplaces, and hot air pipes, 
to which I feel sure we must soon add gas grates, now coming into use in 
large numbers, which are being installed with a reckless disregard of the fire 
hazard. A proper hearth is supported by a trimmer arch with no wood 
beneath it, but it requires a genuine mason to build it, especially if the 
joists are not very deep, while any botcher can lay a hearth on boards, so 
the latter is the popular kind with many contractors. It is a fact that prac- 
tically all the fires under hearths occur where wood is underneath. 

Another dangerous point in a fireplace is just over the top arch under the 
mantel shelf, a place only too often but partially filled. This is especially 
dangerous where patent chimneys are used, owing to the weight imposed 
upon the top of the fireplace, and an iron hood adds much to the security of 
such fireplaces. In fireplaces built across a corner, an additional hazard 
comes from the necessity of turning the flue sideways in order to reach the 
chimney. Sooner or latter it will crack, frequently at the point where it 
joins the chimney, unless the work be first-class. 

A frequent piece of carelessness in building chimneys, is putting in short 
thimbles for stove connections. One recently found did not reach within 
two inches of the chimney breast, and the stovepipe never connected with 
it at all, but discharged into the partition with the usual result. 

Defective chimneys and flues are not, however, as frequent as fire de- 
partment statistics would lead one to infer. Long experience in looking for 
the supposed defect in order to have it properly repaired, convinces me that 
many fires ascribed to defective chimneys must have other origin. Certain 
it is that when the chimney is stripped and the mechanics are ready to 
make repairs, it is frequently the case that no defect can be found, and 
there are in daily use in this city numerous chimneys alleged to have caused 
fires, to which no repairs were ever made, and which are undoubtedly safe 
and always were. 

To be secure, the walls of a chimney should be eight inches thick, or 
four inches with a terra cotta lining. Aside from poor workmanship, the 
settling of the building and too many fires for the size of the flue are most 
to be feared. 

Even with properly constructed chimneys, human carelessness gets in 
its work, as was the case when a plumber, having occasion to connect a 


range on one side of a chimney with a hot water boiler on the other, went 
through the base of the chimney with his pipes— and fire went through the 
same holes soon after. 

Another, though less reprehensible, case, was one in which a hole having 
been made to clean a chimney, the owner carefully nailed over the hole the 
end of a fruit can. Unfortunately he used the wrong end of the can, that 
on which the cap was soldered, so that burning soot soon melted the solder 
and called the fire department. The idea was all right but the application 
of it a little off. 

Open flue holes cause many small fires, chiefly in flats using flues in 
common. The outgoing tenant usually leaves the flue hole open, but oc- 
casionally, in the interest of neatness, closes it with a sack. 

Wooden candlesticks, of which if left burning experiment shows that 90 
per cent, will take fire, portable gas stoves, the exhaust pipes of gas en. 
gines, and swinging gas jets all contribute their quota of small fires. When 
rubber tubes are used in connecting gas stoves, if any air enters at the 
point where the tube fits over the gas pipe, there is danger that when the 
stove is lighted it will also light back to the point where the air enters. If 
then the gas be turned off at the stove only, as frequently happens, instead 
of at the point of supply before the gas enters the tube, the tube is quickly 
burned off and a lively fire results. Two fires have so started in this city. 

One very curious fire or fires occurred as follows : In a building in this 
city, four fires were discovered at intervals of an hour or more in the same 
night, all on the inside of frame partitions and in three different partitions. 
The first fire unquestionably started in a rat's nest in a warm nook, and all 
through, these partitions were found rats' nests containing rags, matches 
and candles. Whatever started the first fire, and recent experiments have 
clearly demonstrated both the fondness of rats for nibbling matches, and 
that such nibbling does ignite the matches, the later fires were undoubt- 
edly caused by a candle or other salvage, carried by a rat from the first fire. 

At the risk of being accused of talking shop, it is my conviction that the 
remedy lies in inspection, with its constant education of the community to 
avoid obvious carelessness, of the mechanic to do his work faithfully, and of 
his superiors to see that he does it faithfully. Theoretically it should be 
possible to secure good work by pointing out to property owners, architects 
and contractors, the dangers arising from certain cheap methods in construc- 
tion, and evasions of municipal ordinances much in vogue with contractors, 
and winked at by architects. 

These practices are fostered by the fact that some one of a certain 
few contractors usually gets the work of any particular architect, not 
through collusion, but because the architect classes certain contractors 
as good men and always gives them a chance to figure, while those partic- 
ular contractors, knowing just what the supervision of that architect amounts 
to and figuring in the light of that knowledge, are able to best a contractor 
intending to live up to the specifications. As a result we have timbers in 
flues, hearths with one course of brick over boards, or as in the case of a 
recent fire with but a marble slab over boards, gas grates set in wooden 
fireplaces and similar evidences of human carelessness. 


In a large building recently erected, the inspector found some forty fire- 
places partially built in violation of the fire ordinance, and to save expense 
to the contractor, agreed, with the consent of the fire wardens, to accept 
them if certain changes were made. Later it was found that the agreed 
changes had not been made and that the work had been closed in so as to 
prevent further inspection. The owner of the building was at once advised 
of the dangerous construction, and that it would lead to a high rate and to 
notice being given to all insurance companies of its existence. The owner 
promptly descended upon the architect (who was a party to the agreement 
with the contractor) , who in turn stirred up the contractor, and the latter 
had the pleasure of rebuilding those forty fireplaces at his own expense. 
That contractor and incidentally the architect and the owner, were 
"educated" at an expense to the contractor of some two hundred dollars. 
That is the practical way to educate the public and to secure faithful work. 

Inspection during construction should be by the city building inspector 
to secure compliance with the municipal ordinances, by the underwriters' 
inspector to secure improvements in arrangement or design, and by both, 
in conjunction with the architect, to secure faithful work. 

At other times, in addition to systematic inspection by the underwriters' 
inspection bureaus, much valuable work could be done by the surveyors 
attached to the different offices, by special agents and adjusters wherever 
their paths may lie, by all insurance managers and employees keeping their 
eyes wide open wherever their business may take them, and by the mem- 
bers of the police force and fire department in their daily life. The police 
especially, who are on certain beats daily, and have time to spare, should 
look after such matters as wooden ash barrels and rubbish, as apart of their 
duty, yet in this city it has happened that an officer reports a wooden ash 
barrel to the health department, which passes it on through another official 
to the inspection bureau, whose inspector must make two and usually more 
trips, possibly to Mission Road or the Park, while the officer who originated 
the complaint is not only on the spot daily but is clothed with the necessary 

As an example of what possibilities in the way of causes of fire are un- 
earthed by inspection, copies have been prepared of an inspector's complaint 
card, showing just what he found in one day's work. The work on this card 
was completed and the card turned in while this article was being written, 
and it is not exceptional in any way. 

In conclusion, let me hope that this hasty skit on a subject worthy of 
more extended comment, will not, by reason of its mention of the rambles 
of the rat with the candle, leave you in a frame of mind akin to that of a 
dear old lady back in New England, who, not being given to light literature, 
was persuaded by the younger generation to tackle Rider Haggard's "She," 
then recently published. Becoming deeply interested, she finished the 
book, and laying it down, remarked in a tone of conviction, "I believe it's 
a lie." 


San Francisco, Feb. 14th, 1895. 




Mr. Fogarty — Mr. President, inasmuch as Mr. Porter is not a 
member of this Association, I think he ought to be tendered a vote of 
thanks for his very able paper. I will make a motion to that effect. 

The President — It is moved and seconded that the thanks of this 
Association be tendered to Mr. Porter for his valuable paper. All 
in favor will signify the same by saying aye. Contrary, no. Carried. 

The secretary will distribute duplicates of an inspector's findings 
in one day's work. 

Fire Underwriters Insp. Bureau 

Dist. No. i BLOCK No. 97 

Entered Book 6, Page 183 

No. 210 
Vol. 1. Sh. 11 





Jno Doe 

206-8 Sutter 


Day & Co. 




Jno Doe 





Chinese laundry 









It ( 










304 Dupont 


Gospel Mission 



Miss Minnie 

15 Martin 


" Doe 

rear 16 Martin 


u u 

s-%-K " 


(4 U 



Jno Doe 




3d — Def. stove pipe con. 

B — Repair Babcock ext'r 

1 st— Protect Range fl 

1st — Open flue 

2d — Prov. thimb. for st-pipe 

B — Rub. under stair, rear 

B — Def. furnace 

1st — Ashes 

1st — Clean gas stove 

1st — Ashes 

1st — Ashes 

1st — Protect Range fl 

Stove too near wall 

2d— Remove T. C. 

1 st— Protect stove-pipe 

1st — Def. stove-pipe con 

1st — Stove too near wall 

2d — Protect gas stove 

Beginning of Block 
Daily Report 

Bldgs Inspected 25 
Complaints 18 
Nov. 26, 1894 

J. W. Barker, 


Are there any remarks? 

Mr. Devlin — I think Mr. Porter's paper is very valuable, especial- 
ly that part in regard to matches and rats in partitions, and if Mr. 


Porter were not such a Large man, weighing upwards of two hundred 
pounds, I think it would be a good idea to refer the paper to the 
arson committee. It seem to me it would be a good point to catch 
those rats if possible. 

The President — Do you feel like taking* up another subject, or will 
you adjourn? 

Mr. W. D. Spencer — I move we adjourn, to meet at 2 o'clock. 

The President — It is moved and seconded that we adjourn to 
meet at 2 o'clock. Before putting the motion I will say that we 
hope to take up number six, then eight and other papers, in their 
regular order this afternoon. It is my desire that we shall Leave as 
little for to-morrow as possible, aside from the election of officers 
and the reading of the "Knapsack," in order that we may not feel 
hurried as we did last year. I am anxious to have everybody hear 
the "Knapsack, " which has always been the piece de resistance of the 
programme, and we cannot expect some of these young gentlemen to 
stay to the last for they feel it necessary to hurry away to don their 
swallowtails for the dinner, which, by the way, will be given to- 
morrow evening at the new Delmonico. Messrs. Spencer and (J rant 
inform me that this is the finest banqueting hall in San Francisco, 
and this will be the first, and perhaps the last occasion on which wo 
will be able to dine there, hence I urge that all members be present. 
If you have not already sent in your acceptances for the dinner to- 
morrow evening, please do so at once, in order that the committee 
may know how many plates to arrange for. If any of you have 
friends whom you desire to invite to the banquet who are connected 
with the insurance business, of course you are at liberty to do so. 
It has not been the custom to invite people who are not connected 
with the insurance business. 

All who will favor the motion to adjourn until 2 o'clock, signify 
in by saying aye. Contrary, no. Carried. 

Adjourned until 2 p. M. 



The President — We will come to order, gentlemen. I am glad to 
notice the faces of some who were not present this morning. 

The paper by Mr. C. F. Towe, Fire Marshal of San Francisco, 
will be read by Mr. Outcalt, at this time. 

Mr. Outcalt— (Reading:) 

Rolla V. Watt, Esq., President Fire Underwriters' Association of Pacific: 

Dear Sir : I have received your communication asking me to prepare a 
paper to be read before your Association, and at the outset I would desire to 
say that the subject you indicated (being as it is of such vital interest to 
the members of the Association) ought to have been entrusted to an abler 
writer than myself. It is a great and important question, and while all 
have expended extended thought upon the subject, I am doubtful if its full 
solution is possible either to them or to myself, however desirable such an 
issue would in reality prove to be. 

Though professedly deficient in this regard, I will at any rate give to the 
Association the benefit of my ideas upon the question of a measurable con- 
trol of the crime of arson, the causes which lead to its commission, and what 
I consider to be the remedy (in so far as the latter is in the hands of the 
underwriter) for a crime so costly to your profession, and so difficult of 
detection and punishment. 

It seems strange to me to find mvself pausing for a moment in my work 
of prosecuting criminals of this class, to ask myself the difficult question 
which you ask of me. I am in the habit of going along in the performance 
of my duties upon the lines laid down in our code, hardly ever thinking as 
to what may be the real cause, but satisfied if I am able to group a few out 
of the many which incites a certain class of our people to its commission. 

As a matter of fact, I think revenge and the hope of gain are the main 
actuating causes, the latter outnumbering the former. In fact only one of 
the former class has come under my personal observation, and he is now 
serving a term of seven years in the State Prison for his offense. All the 
others with which I am familiar, I am convinced the motive has been over- 
insurance, and as this is true, I will (with your permission) devote a few 
moments to the discussion of the question of 



The control of which would have very much more to do with the lessening 
of the crime of arson, than all other things combined. 

It is, in my judgment, entirely correct to say that over-insurance is the 
incentive to incendiarism, and when you have disposed of this, you have 
practically solved the question. 

My experience during the past nine years as Fire Marshal of the city of 
San Francisco has been such, that about the first question I propound is : 
What is your insurance \ When starting in to investigate a fire which on 
its face looks to be one of design, I have been taught by experience to look 
there first for the motive. In almost every case I find that I am right; in 
fact, as I have before said, I rarely find any other motive present. In all 
convictions of persons guilty of the crime, there is ever disclosed a chain of 
circumstances, the chief and strongest link of which is a sordid love of gain. 
That over-insurance is therefore such an incentive, is a fact beyond dispute, 
and how best to control and prevent it is the problem which the most con- 
cerns us, and in its solution and control lies the means of rendering arson an 
isolated and exceptional crime in penal history, instead of being a matter of 
common occurrence as it now is. 

To approach the question from the position occupied by the insured would 
be a task well-nigh impossible, as it would ever be a most difficult matter to 
say and then to prove, that the insured with willful and criminal intent 
made a valuation which on investigation disclosed itself as vastly over- 
estimated. The difference between the real and the represented value 
would indeed have to be very great, before I would feel justified in holding 
a person, or a jury convict by reason of this single circumstance. It would 
be hard to draw the line between positive dishonesty and unintentional 
exaggeration. The owner of goods might fairly be expected to place upon 
his merchandise a higher valuation than anyone else would do, and this 
would be only natural. To make out a complete case before a jury, however, 
under the criminal law, would require that an insurer went much farther 
beyond the mark of fair or real valuation than would under the most 
extreme circumstances be allowable, and even then, where might the line 
be drawn \ 

We must, I think, review this matter in its practical aspect. However 
certainly insurance companies may be able to protect themselves from the 
avarice of claimants through the operation of the conditions of the policy, 
there is absolutely no escape from the consequences of the unchecked crime 
of arson, until in its very root, branch, and substance has been eradicated, 
through the enactment of wise laws, preceded by that attention to the 
subject upon the side of the underwriter to the matter of over-insurance 
which he must devote to it, if he would hope to escape its effects. 

The laws even as now framed, do much in the way of prevention and 
punishment, probably as much as can soon be expected from it, in admitting 
the prosecutor to employ the mere fact of over-insurance as a sufficient 
motive for the crime of arson. To make over-insurance a crime in itself 
would be adding another law to our statutes, which would surely be a "dead 


letter/' We are thus compelled from this state of facts, to look to the 
insurance fraternity themselves as the sole means to furnish the remedy. 
In your hands lies the power to render to yourselves and to the general 
public a great and valuable service, a service which can be rendered by 
none other, and which ought not be neglected. I think I am fully aware 
what answer you will make to this — that it will entail great expense, and 
much valuable time. But you would surely see the saving when at the end 
of the year you came to look into your loss-ratios, and I am fully persuaded 
that the resulting good would more than compensate you for whatever time 
and expense you might devote to it. You will not forget that while from 
the remains of a partially destroyed building you may gather sufficient 
evidence to prove over- valuation ; the building which is totally destroyed 
offers no such chance of escape, and that there have been many such, cannot 
be denied. Ashes, like dead men, tell no tales, and the conclusion is thus 
forced upon us that the practical remedy lies not so much in long-continued 
and stubborn contests, not in new trials and protracted litigation in civil 
departments, as in greater vigilance and labor upon the part of yourselves, 
your agents, and solicitors; especially the latter. Teach them that the 
value you contemplate insuring must be ascertained beforehand. Teach them 
that the character of the person desiring the insurance must be known to 
them and to you through them. The mere unsupported statement of the 
assured is not sufficient, and should not be so unguardedly taken as is now 
the too common rule. Ascertain by critical investigation and inquiry not 
only what the character of the assured subject is, but what the character 
of the insured is as well. Look especial ly to the solicitor, for in my experi- 
ence I have seen only too often that he is. after all, the one who should be 
prosecuted for arson. Many times it has come to my knowledge that the 
solicitor has, through the advice and arguments used by him. really caused 
the defendant to be brought before the bar of justice, for I have listened 
time after time to the story told by the defendant : how it was through the 
persuasiveness of the solicitor that he had been induced to place more insur- 
ance upon his property than it would stand. 

I have heard it urged by this defendant that the solicitor should have 
been the one to caution him as to the dangerous results of over-insurance, 
and when I have considered that the solicitor's thought was solely as to the 
percentage he would receive, I have then made up my mind that he was the 
genuine culprit, and as such should be the one to suffer. Remember, the 
party effected the insurance at the solicitor' s advice : hard times came, bus- 
iness was dull and unprofitable, and in an idle moment (hunting amongst 
his papers) he comes upon his policy, reads it, ponders over it, reads it again, 
and the seed having been sown, he thinks he sees an avenue of escape from 
his financial troubles by burning his property. He finally yields to the 
temptation, and then comes the Fire Marshal with his questions, and these 
he is bound to answer. The officer sees at a glance that a crime has been 
committed, and at once asks: "How is it that you are insured for more 
than your value? ? ' The story is always the same: "My insurance man 
forced me to take out that amount of insurance." He tells the same story 
to the jury, and then how is it to be wondered at, what labor it is for the 


Fire Marshal to break down the evidence. The attorney asks : u The insur- 
ance company took your money, did they not?" and when addressing the 
jury says, i4 They took his money and now say he is over insured." All of 
these things tell upon the jury, let me assure you, and I have heard it re- 
peatedly urged in the defendant's behalf, with perhaps the wife and babe 
of the defendant by his sides and almost always with success. Can you 
wonder, then, at the labor it costs the Fire Marshal to secure a conviction \ 
This, gentlemen, is the only practical suggestion I am able to make. It 
is at any rate the only one I can offer. It would entail increased expense, it 
is to be admitted, but I contend that if before insuring property it be care- 
fully appraised or inventoried we would have gone far along the road in 
materially reducing the number of arson cases with which the business is 
now afflicted. 

Respectfully submitted, 

CHAS. TOWE, Fire Marshal. 

The President — There is a supplement to that paper, a case which 
came under Mr. Towe's notice within a day or two, which 1 thought 
might be of interest to you. 

Mr. Outcalt — Mr. Towe offers this supplementary anecdote: 


Since the above paper was written, the following case has come under 
my observation, and I think it will illustrate, as it is so recent, our subject 
more fully, and also give you an idea of the workings of a solicitor, and to 
what depths he will stoop to gain his business, how devoid he is of principle. 

A fire occurred on February 4th, 2 134 a. m. Saloon and dwelling. After 
my investigation into its cause, I was satisfied it was designed, I sent for 
the owner to appear at my office, and there I placed him under a rigid exam- 
ination, he claimed he had a loss of about $700, but by the time I was 
through, he accepted $165. I find he bought out the place three months ago 
for $450. As usual, the solicitor was on deck, urged him, as he says, to get 
out a policy, went over the place w r ith him and told him to take out $800. 
In looking over his policy I found a cash register mentioned ; asked him 
where it was ; said he never had one, never wanted one ; found all the 
items over-insured. When questioned as to this, he said, *'Oh my insurance 
man done it;" said it was right, in fact did not think he had done wrong. 
In getting down to him he told me his place was not worth $800, and when 
I told him of his insurance he w^as asked to explain why he insured a $450 
stock for $800. This answer was the same old answer that has been told 
me so many times : my solicitor told me to do it, and he w r ould take care of 
me when the fire came ; and also told him that if you only insure for $500 
you would never get over $300 if the fire came ; so let us make it $800, as it 
costs but a trifle more. You will then come out even. I find by the ap- 
praiser that the whole place was not worth more than $500, setting it at a 


large figure. Is it right for a solicitor to lay such a temptation before an 
unscrupulous man? Is he not the real criminal? I think so. I called on 
this solicitor, and read the riot act to him, telling him all his client had told 
me. He then said, "Oh that is done all over, and I hope you will not be 
hard on him, but let him get a good settlement, as he is well known, and if 
he has trouble in his loss I will lose business from his friends. " Even hoped 
I would be easy with him, which in my mind meant, wanted me to become 
a party to his actions, and would no doubt call me a good fellow if I would 
say nothing to him about his fire. My language to him soon told him what 
I thought of him, and I do indeed wish the law under which I must work 
gave me the power to arrest him instead of the one who actually set the 
fire. I pictured to him in what circumstances he had caused this man to be 
placed, a man who would forever be under the surveillance of this office, 
which I assured him was a position I would not desire to place any one in 
wrongfully ; but all he thought of was, it would surely hurt his business if 
the affair got out among his friends, and begged me not to make him 

Why should any solicitor conduct his business so criminally ? no doubt 
these questions were put to him when he brought in the risk : Do you 
know this party ? Is he a safe risk \ Has he got £800 worth in that place '. 
I know his answer. You gentlemen believed him : you have to. You have 
no other way, and he knows it. 

He tried to explain the cause of the fire tome, saying, "Why this man 
was three miles away when the fire broke out." Why was he so far away 
at that hour of the morning? was my question, and smiling at him I could 
only look at him, and it was an answer well suited to his question. He 
knew and felt my silence ; thus for his paltry percentage he caused this 
man to be placed in a suspicious manner before the fire marshal, who will 
never forget him. No doubt that man's name will be recorded in that 
office, and it will not mean that he is an honored citizen. But the question 
again arises, Who is the more guilty \ I can come to but one conclusion : 
the solicitor is. But no punishment can come to him, except from your own 
hands. Thus I show again the remedy for overinsurance as an incentive to 
incendiarism lies with yourselves. 

The President — Gentlemen, this is rather a severe arraignment 
that we have been subjected to by the Fire Marshal. I presume it 
is justified by the facts, however. If any of you have any remarks 
on this excellent paper, we would be very glad indeed to have them 

Mr. Argall — I have nothing very particular to say on this point, 
except that while in all fire insurance contracts it is provided that 
fraudulent over-valuation is sufficient to vitiate a claim, the great 
difficulty has always been to know where to draw the line of such 
over-valuation. I remember some fifteen years ago. the courts ren- 


dered a decision on that very point, in which the claim was made Out 
for three hundred per cent, of what was eventually proved to be the 
value of the goods destroyed, and the Lord Chief Justice— I forget 
who it was — ruled that a three hundred per cent, over-valuation was 
such an instance of fraud as would vitiate the policy altogether. It 
is interesting to know where to draw the line, whether it is to be 
fifty per cent., or one hundred per cent., or two hundred per cent., 
or more of the true value. 

The President — Are there any other remarks ? 

There are several visitors in the room whom I will be glad to 
introduce to you. Mr. Philip S. Bates of Portland. Mr. A. G. Davis 
of Oakland, and Mr. Porter and R. R. Roper of San Francisco. We 
are glad to see these gentlemen with us. If there are others present 
not members of the Association, we will be glad to have their friends 
introduce them. 

We have several communications which the Secretary will read 
at this time. 

The Secretary — This communication is from Thomas H. Mont- 
gomery. President of the American of Philadelphia. It is dated on 

the 6th instant. (Reading:) 

Philadelphia, Feb. 6, 1895. 
Mr. Rolla V. Watt, President: 

I am much indebted to you for your kind thought of me by your favor of 
31st ult., asking me to put out some thoughts for the annual meeting of your 
Association. I wish I could respond to this gracious suggestion, but cannot 
now base any promises, even, for its consideration, upon the present barren- 
ness of ideas in my old worn head. 

I might say something on your oft unpacific situations, but an outsider's 
view's would, I am sure, not be helpful to make them in any way pacific. 

I look with interest to your Association's annual meeting, for under its 
aegis much good for union and good practice must be developed, helpful to 
us all, both company and manager. I have large faith in these councils 
which afford busy competitors the opportunity for an honest vis-a-vis and 
common conference which help to soften all antagonisms and tend to 
strengthen the business in all essentials of good and remunerative practice. 
I wish I could be present w r ith you in person and witness all the good-fellow- 
ship and listen to its papers, for I should be aided by them in many ways, I 
am sure. 

With my best wishes for a pleasant and profitable meeting, believe me, 
I am Very truly yours, 

Taos. H. Montgomery, 

(President of the American of Philadelphia.) 


The next is from Mr. J. Montgomery Hare of New York. United 
States Manager of the Norwich Union Fire Insurance Society. 

New York. Feb. 7, 1895. 
Mr. Holla V. Watt, President the Fire UnderwHters' Association of the Pacific. 
San Francisco, California: 
Dear Sir: I have the pleasure of acknowledging receipt of your notice 
of the nineteenth annual meeting of the Fire Underwriters* Association. 
With the thermometer, as I write, at 16, and a snow storm beginning. I 
yearn for the milder climate of your Coast. Nothing would please me better 
could I be present and meet the underwriters of the Pacific Coast, who 
seem to have been able to have discovered a way of making money in the 
fire insurance business. High feeding in the past seems to have made some 
of these underwriters frisky, but if they could have the depleting diet that 
we had in the East during 1893, they would become sober. I trust that you 
will have a pleasant meeting, and will be with you in sympathy if not in 

Yours very truly. 

J. Montgomery Hare. 

And this is from Thomas F. Goodrich. President of the Niagara 

Insurance Company. (Reading:) 

New York. Feb. 5. 1895. 
Rolla V. Watt, Esq. : 

My Dear President : Many thanks for your invitation to the nineteenth 
annual meeting of the Fire Underwriters' Association of the Pacific. 

I trust by that time you may be able to congratulate each other over a 
restored "union," and have entered upon a long era of prosperity. 

I need not say it would give me the keenest pleasure to be with you on 
the occasion referred to, and if I could avail myself of an electrical pneu- 
matic shoot, or the inevitably coming space annihilator. my good-looking 
Herold would be instructed to announce my coming on the overland Sun- 
down line, leaving New York after business hours reaching San Francisco 
in time for dinner. 

I hope I shall not have to wait the opening of that line before seeing 
your beautiful Coast again. 

Very sincerely yours. 

Thos. F. Goodrich. 

The President — This is from one of our old Coast boys. Dave 
Rorick, Vice-President of the American Central Insurance Company, 
with whom I was formerly associated, and he was at one time con- 
nected with the Commercial Union Insurance Company in this city. 


St. Louis, Feb'y 9th, 1895. 
Mr. Rolla V. Watt, President. San Francisco, Gal. : 

Dear Sir: Please accept thanks for yours in re the annual meeting 
(19th) of the F. U. A. of the Pacific. Delighted indeed would I be to again 
stretch my legs under their festive board, and I hope to have the pleasure 
of doing so again some time in the future. Never too much " booze," but 
always enough and of the best. 

With highest personal regards, sincerely yours, 

Dave Rokkk. 

The President — I regret to state that the third paper, under 
number six. has not been received for reasons which I am entirely 
unable to explain. Many of you who are special agents are acquainted 
with Frank D. Brown of Phillipsburg. When I wrote inviting him 
to write on this subject. ,, The Special Agent From the Local Agent's 
Standpoint." he replied that nothing would give him more pleasure, 
because in his experience he had found that special agents were too 
busy attending to their several duties to study Otey's Manual, and 
he thought a local might be able to give them some points. I wrote 
Mr. Brown, reminding him of this paper on the 6th of this month, 
and we wired him last Friday, but have had no answer to either 
letter or telegram. The first two numbers, however, are ready. I 
will state that these three papers were requested in the nature of 
answers to the very excellent paper written by our friend Mr. Amos 
Sewell and read two years ago. You will remember he wrote on 
"'The Manager From the Standpoint of the Special Agent,'' and his 
remarks were rather to the disadvantage of the manager. I con- 
cluded we would let him. that is. the special agent, see himself from 
the standpoint of his manager, from that of another special, and also 
of the local. He might, in this way. get a very good picture of him- 
self. We will now hear from Mr. Hugh Craig. 


Mr. Craig— ilfr. President and Gentlemen: In an unguarded moment — 
I must have been a little off — I listened to the voice of the charmer, 
and consented to address you on the subject of "The Special Agent 
From the Manager's Standpoint." And I meet you with a good 
deal of embarrassment. I have been accustomed to speak more or 
less on this floor: the design of the carpet, the pictures around the 


room are more or less familiar, and I always see a few familiar faces 
who know my failures, and how easily I am sat on; but looking 
around amongst these coming special agents — for from your ranks 
must be drawn the men who are to be the executives of the various 
offices, who are to hold up the hands of the managers of the future. 
I know that I shall have to be very careful what I say. for there is a 
"chiel takin notes. " I see. and I will have Mr. Amos Sewell. or 
some one. after me with a sharp stick unless I am very careful. 

I have not looked into the genesis of the special agent, but I take 
it that he has developed from the necessities of the occasion — from 
the necessities of the business. Where I come from, in the Cannibal 
Islands, we call them inspectors, and I rather like the name inspector, 
in preference to that of special agent. Beginning at the time when 
the Secretary of one of the original Hartford companies, after he had 
canvassed his immediate locality, the headquarters of his company, 
had ground out all that was possible from the Board of Directors, 
and their friends and the stockholders, he looked about him for a 
desirable man to go a little beyond the outskirts of his immediate 
town and immediate neighborhood and carry with him not only the 
credit of the company, but the character of the company: for I take 
it that the special agent in all his efforts to advance the interests of 
the company must carry with him and represent the character of that 
company, and I could perhaps best illustrate that by reciting an 
incident in my own experience. 

Perhaps some of you don't know that I was pitchforked into the 
insurance business. I labor under the disadvantage of not having 
had an insurance education, like some of you. I did not have that 
very desirable and useful training which comes from the desk of the 
office-boy, and the postal clerk, the recording of expirations, the 
keeping of the register — all through the various desks of the genera 
office, until I came to the cashier's desk and close to the manager, 
and became a part of the office, and was able to carry out from that 
office to the country, or territory under his jurisdiction, all the tradi- 
tions of that particular office. But only having had an experience 
packing lumber, and making myself generally useful at $1.75 a day 
over in Oakland at the time that the company that I represent 


required somebody here that they happened to know. And here 
again comes a point that I would like to emphasize: That the special 
agent gets nearest to the manager, and gets nearest to the company 
when they have an intimate acquaintance with each other; especially 
so when the men grow up in the office. From the smallest — from the 
lowest desk, gradually up to the highest desk. I think this a very 
desirable training for the special agent. I did not have that advant- 
age, and when I arrived in New Zealand with a letter introducing 
me to the Board, and recommending that I should get the appoint- 
ment, it was a couple of weeks before they decided that they would 
intrust the future of the New Zealand Insurance Company to a man 
who had been pitched into it accidentally, and whose only experience 
was in lumbering, butchering, shipping, and things of that sort, and 
grocery store — but when it did come, and I had a chat with the 
manager, he told me of the responsibility that would be placed upon 
my shoulders; when I got through with him I thought I had got oft' 
very cheap. I thought to myself, now if I do not require to have 
another interview with the manager, I will get oft all right; the 
steamer goes in about seven days, and I will have all the rest on 
paper; I will have plenty of time to digest it before I get to San 
Francisco, and then I will be six thousand miles away; it will be forty 
or fifty days before they would find out any mistakes, and possibly 
something may turn up in the meantime. Amongst the directors 
was an old gentleman named Stone. He was a miller and shipping 
man — had a little touch of everything in the colonies, as many of the 
men do on this Coast. He was a man of good repute, whose word 
was his bond. Old man Stone was known all over the coast of New 
Zealand as a man of the utmost probity: one of the founders of the 
New Zealand Insurance Company. He was father to a number of the 
organizations there. However, after a meeting of the Board of 
Directors, he said to me: ;i I want to see you over at my office after 
lunch." Well, Mr. Stone had been superintendent of a Sunday- 
school. Perhaps some of the members of this body think I never 
attended a Sunday-school, but I did, and I thought to myself, "Well, 
now, I wonder what is coming. ' ' I had been to school with one of 
his boys, and one of them had given me a good licking, and I got 


even by licking one of the smaller boys — I always look for a man 
smaller than I am when I undertake to have a row. Said he. "I 
called you over to have a little chat about San Francisco, and to give 
you a little advice. Mr. Pierce tells me he has had you up for an 
hour or an hour and a half. We think we know you. And I know 
some of your faults, and I know you are pretty headstrong. I know 
your father has had a good deal of trouble in training you. but I am 
not going to rub this thing in too deep: but above all things I want 
to impress upon you this, that going, as you are. to a strange place 
with our insurance company, and we are very proud of it. don't be 
anxious, too anxious to roll up business. Don't be too anxious, as 
you think, to make money. I want you to understand this: that if 
at the end of five years you have not made one six-pence — that was 
the expression — but you have established a good name for the com- 
pany, we will be abundantly satisfied. 5 ' Well, after talking to me 
that way — ;i if you do no more than to establish the name of the 
company'' — and an interview with the other directors of the Board, 
you have no idea what a relief that was to your humble servant: to 
feel that those men who were in the business so many years, who had 
established the company for the purpose of making money, could 
send a man off six thousand miles with that assurance that if at the 
end of five years you have established a good name for the company, 
we will be abundantly satisfied. 

Now I take it, in considering the genesis of the special agent, that 
he is the most important item in the outfit, and in the instructions 
that can be given to the special agent, that of establishing the good 
name of his company is the most important. No matter what the 
necessities may be of his manager, and he is weak, as all men are. 
he has his soft points and his weak points: no one will find these out 
quicker than the special agent, because upon him depends the good 
name which his company will make aw T ay from the general office. I 
am sure I voice the sentiment of a number of the general agents and 
managers in San Francisco when I say that is about the most impor- 
tant thing that a special agent can impress upon the local agent — 
namely, the character of his company. Because special agents come 
and go, but the company is supposed to go on forever. Therefore. I 


say one of the points that I would like to impress upon the young' 
men who are before me. who are growing up to the positions that 
you expect to fill as special agents, above all others, that they will 
protect the good name of the company. 

There are special agents in great variety. The special agent 
that I have partially described has grown up in the head office 
of the company, grown through the various grades until the position 
has been ottered to him. it is a desirable one. and one that relieves 
him from the drudgery of the office, and which he can with reason 
look up to as a season of relief, of opportunity to distinguish himself, 
to meet men. to visit new places, and to enlarge the sphere of his edu- 

Now having paved the way for what I think to be one of the most 
important duties of the special agent, when he has acquired that, and 
accomplished that, he is the right arm of the manager. There is no 
doubt about that. No manager can put too much confidence in the 
special agent. For upon him depends the success of the company 
outside of the important district under the supervision of the general 
manager or the general agent. 

Therefore I would say to the gentlemen who are before me that 
it is a position to look forward to. a position desirable to fill, and 
above all things, that is the one to bear in mind. That the company 
and the interests of his company are in his care, and it should be a 
sacred treasure. One to be guarded with all care and preserved, the 
good name that is placed in his hands. 

Mr. Chairman. I promised you I would not write a paper but I 
would say a few words on the subject of the special agent and his 
relation to the manager. If I have not covered the ground it is my 
fault. It is not because you have not given me sufficient notice, but 
I will reiterate what I have said and leave it where I consider the 
special, the right arm of the executive officer, and with that I leave 


Mr. Craig — Mr. President, having done the special agent and 
manager in my poor way. I am now requested to do the marine man 
next door. 


The President — We are sorry to have you go. but will excuse you. 
The next paper on this subject will be "The Special Agent From 
the Special Agent's Standpoint." by Mr. Whitney Palache of the 
Hartford. Mr. Fogarty has consented to read this paper, as the 
writer is in Montana. 

Mr. Fogarty — ( Reading : ) 


In writing on this oft used subject it is not with the hope of saying any- 
thing new or original, but in response to a request to write one of a set of 
three papers to be read at this meeting coming from the three sources 
where there is the greatest familiarity with the characteristics, require- 
ments and experiences of the fire insurance special agent. 

In the first place the writer wishes to disclaim any belief in the proposi- 
tion that success as a special agent requires any very remarkable gifts, rare 
talents, or special genius. An article of this kind is necessarily somewhat 
visionary and has to do with ideals. Its purpose is to suggest a type : not 
to describe an observed character, but to picture the embodiment of all 
essential qualities. 

The qualities required for success in this position are the same that 
command success in any business or profession — namely, industry, integrity, 
and intelligence. It is true that these qualities are all too rare, but it 
would, indeed, be an unworthy calling that could dispense with any one of 
them. There are many things which go to influence a man's career, but - 
these above mentioned are the fundamental essential qualities on which 
any true success must depend. These terms— industry, integrity, intelli- 
gence — are such common everyday words that their mere mention does not 
suggest their full meaning. 

Hard work is the first requirement in almost any undertaking. Willing- 
ness to make physical effort, to sacrifice personal comfort, to apply unfailing 
energy to every task which is presented — these are some of the meanings of 
industry, but there are other and higher meanings. Added to physical 
exertion must be enthusiasm and ambition, if the best results are to be 
attained and if energy is not too slacken nor interest fail. When work is 
done in a perfunctory manner, however faithfully, it lacks zeal and soon 
becomes a drag upon the worker. There is a vast difference between doing 
mechanically what comes plainly before one to do, and in seeking constantly 
for wider fields, considering new methods, conceiving means other than 
those ordinarily laid down for the accomplishment of given ends. Slow 
plodding men have qualities of patience and perseverance that are often 
lacking in their more brilliant rivals, but thoroughness is not incompatible 
with originality and independence of thought. In other words, activity of 
mind is as important as activity of body. The one is the complement of the 

In his absence from the immediate supervision of his superior officers and 
in the removal of the restraints which follows a life of travel spent princi- 


pally among strangers, the special agent needs, on his own account as well 
as on that of his employer, that he have moral strength and courage. His 
temptation is much more to sins of omission than to those of commission. It 
is, so often, easy to content one's self with superficial work, trusting to 
ready pen or tongue to find a substitute for exact and complete information. 
Such slighting of work arises from many causes other than laziness or indif- 
ference. Often a man is fatigued with a long trip; home cares seem to call 
him ; he is impatient for comforts which the road denies him ; finally the 
duties required of him often seem trivial and unimportant. The cause last 
named is, in the writer's opinion, the most potent of all in influencing a 
man to skip or slight the work which lies before him. Only high purpose 
and conscientious devotion to duty can help him here. His best guide to 
the proper conception of his duty is to stop and ask himself what he would 
expect of a man in similar circumstances if the positions of himself and his 
principal were reversed. When once he is convinced of the proper course, 
he is a weak man and untrue to himself if he allows himself to swerve from 
the path which his conscience tells him is the true one. Let him not deceive 
himself with sophistries nor disguise to himself what, in his own heart, he 
must recognize as remissness or self-indulgence. Self-examination is often 
most useful and if one is not candid with himself he will often be mislead 
and find himself unconsciously wandering far from his ideals. When the 
temptation comes to deceive others, let him well consider whether he is not 
doing greater violence to his own sense of right and manhood than any 
possible gain can compensate him for. All these are some of the considera- 
tions which must go to define integrity. 

Intelligence is a broad term which is intended to cover mental qualities. 
No one word can express these, but an incident which Dr. John Brown 
relates in one of his famous essays gives the pith of the whole thing. A 
famous painter, at work in his studio, was interrupted by a pupil with the 
question: " With what do you mix your colors to produce that peculiar 
effect?- Without ceasing his work the master answered, gruffly: " With 
brains, sir!" This is the material which must be "mixed" with the other 
requirements to achieve success in any undertaking, great or small. 

The work of a special agent does not call for a very high order of intel- 
lectuality, but good hard common sense, ability to think quickly and com- 
prehensively, and to reach prompt conclusions are prime requisites. In 
comparing careers of different men one sees that diligent and conscientious 
work often falls short of the highest reward because of the absence of the 
element which the painter so tersely styled "brains." Upon the manager 
rests a heavy responsibility in this very connection. Too often the special 
agent is left with too little discretion. He is treated as a machine to be 
operated by the will of his employer and not as a trusted officer to act as his 
best judgment dictates. The manager can not expect to have thoughtful, 
intelligent work done unless he leaves some scope for independent thought 
and action. His aim should be to make the special agent think for himself. 
The occasion is sure to arise when prompt, decisive action is necessary, and 
delay or hesitation forfeits an opportunity. No time is given for consulta- 
tion with nor reference to superiors, and a man cannot properly meet an 


emergency of this kind unless his previous training and habit of mind make 
him not only able and willing but free to act on his own responsibility. 

But, beside these personal qualifications, there are other important 
considerations in describing the career of a special agent. 

The interests of the manager and the special agent are closely allied, and 
it is of the utmost importance that there should be the most complete mutual 
confidence and respect. The best results certainly cannot be obtained when 
t hoy treat each other u at arm's length" and are not fully prepared to assist 
and support each other. There can be no more unfortunate condition of 
affairs than for a special agent to be visiting his agents with either apolo- 
gies for or complaints against his principal. Hardly less deplorable is it to 
see a special agent laying out certain lines of work for his appointees and 
having his plans all upset by contrary instructions from the home office. In 
either case both the office and its traveling representative lose dignity in 
the eyes of the agents, who are kept in a constant state of uncertainty as 
to the wishes of their principals and can have little satisfaction in confer- 
ences with a special who is so plainly out of harmony with the office he 
represents. When a special agent is perfectly sure of the support and 
unwavering backing of his principal, he works with a sense of assurance 
and confidence that in itself is an element of strength. If the manager is 
not prepared to give his special the fullest degree of confidence he either 
has selected the wrong man or he puts the position on a very low plane and 
makes it a cheap and irresponsible office. 

The traveling representative of a company should reflect, as nearly as 
may be, the character of his principal and the methods and habits of his 
office. His influence is largely a personal one with the agents he visits, but 
it does not become a permanent, forceful thing unless it bears with it some 
sense of his authority and a recognition of the real power supporting him. 
This influence cannot be exerted unless the special agent, on the other 
hand, also recognizes and sustains the dignity that should properly belong 
to his office and his powers. Unless he respects his position he can not 
command respect for it from others. 

As the special agent should reflect to the agents the management he 
represents, so he should be able to present the agents to the view of his 
principal. To do this he must know his men. This knowledge is not to be 
gained by mere sociability and friendliness. It requires study and thought. 
In order that the manager may deal intelligently with his various agents, 
he must know them individually and for this knowledge he must depend 
principally upon his special agent. He can judge to some extent from the 
general tone of the correspondence and the work submitted by the agent, 
but information as to his capabilities, habits and temperament is also impor- 
tant and can be gained only by personal contact w^ith the man. This, then, 
is one of the most important duties of the special agent, and to achieve 
success in this line of work it is necessary that his be a strong personality. 
In order to receive impressions he must make impressions, and from contact 
with a man carry away a distinct presentment at the same time, leaving 
his own imprint upon the mind of the other. Too many have the notion that 
a special agent should be of stuff so yielding as to shape itself to any form 


of character with which he comes in contact. This is surely a false view 
for such material must lack strength and firmness. Tact is essential, but, 
while manner of approach must change, the man himself should always 
appear intrinsically the same. Otherwise he is not himself, not genuine, 
but acting a part, and an influence acquired in this way can not be 

The habit of mind, the manner of speech, and the rules of conduct which 
belong to the true gentleman, conceiving the word in its highest sense, are 
the qualities which provide the best approach to the majority of men, be 
they refined or rough, educated or ignorant, noble or common. Let managers 
look to this and see that their representatives worthily represent them, both 
in character and in ability. 

It is not the purpose of this paper to discuss the technical duties of the 
special agent. These are various, but to them all the same qualities must 
be brought. Whether he is cultivating an agent, inspecting a risk, or 
adjusting a loss, let him but have for his aids industry, integrity, and intel- 
ligence, let him respect himself and his position, let him remember that he 
is performing work worthy of a gentleman, and he will not fall far short of 
fulfilling his entire dutv. 



The President — Gentlemen. I am sure that the universal opinion 
of that paper will be that it is a very excellent treatise in reference 
to the character and duties of the special agent. I am sure there 
are those here who will desire to make some remarks on this subject. 

Mr. Gunnison — I would like to say that in the absence of Mr. 
Palache, I think addresses are not sufficient to express our apprecia- 
tion of such a paper as that. I would therefore move that the vote 
of the Association be given Mr. Palache for his very worthy and 
excellent paper. 

The President — It is moved and seconded that the thanks of the 
Association be tendered to Mr. Palache. I do not know that this is 
exactly in order. 

Mr. Gunnison — I think it is: that has been done. 

The President — Are you ready for the question. All in favor of 
the motion will signify it by saying aye. Contrary, no. Carried, 
and it is so ordered. 

Are there any remarks? Wehave had very little discussion in 
reference to the several topics before us. The first address on this 
subject should have developed some discussion. We have with us 
several managers — Major Christensen, Mr. Craig, Mr. Boyd, Mr. 


Driffield. Mr. Pope, and others. I would be glad to hear from these 
gentlemen on either of these papers. 

As there appears to be no one wishing to speak on the subject, we 
will pass to the next number. I think that no manager could have 
any more completely set forth the special agent from the manager's 
standpoint than Mr. Palache did: he took up Mr. Craig's line of 
argument, you will notice, almost to the letter, and carried it further 
than the latter did. The point Mr. Craig made — that the manager 
and the special agent should be on very intimate terms — I regard as 
very important indeed. It seems to me that there ought to be the 
utmost cordiality and confidence existing between the two. If Mr. 
Craig's idea, and Mr. Palache's also, that the special agent should 
as far as possible represent the character of his company and his 
manager, prevailed, his work in the field. I imagine, would be always 

Mr. Driffield — Before adjourning for lunch, the papers prepared 
by the members of the Clerks' Association were submitted to a com- 
mittee, and they are ready to make a report whenever it is in order. 

The President — We will hear the report of this committee. 

Mr. Driffield — There being only two papers submitted for compar- 
ison, the question as to the better of the two has been decided. 
There is one paper, entitled "The Influences Prejudicial to Fire 
Insurance Interests." which is of considerable merit and full of 
thought, and well written, and owing to its rather unusual length, 
the committee would suggest that this paper only, of the two. be 
read, as it is even longer than the ordinary papers submitted by our 
own members. Of course, if you desire to hear the other one. it can 
be read as well. 

The President — You have heard the report of the committee 
What is your pleasure, gentlemen? For the benefit of those who 
were not present at the morning session. I will state that at a meet- 
ing held early in the year it was decided that we should invite the 
Insurance Clerks' Association to write papers and submit them to a 
committee of this Association for examination, and that the best of 
those papers, so submitted, should be selected and read at this meet- 



ing. and printed in our proceedings, the idea being" to encourage the 
young men in their literary efforts. Our offer has resulted in two 
papers being sent to us. which have been referred to the committee, 
of which Mr. Driffield is chairman, and of which committee you 
have just heard the report. What is your pleasure? 

Ml*. Gunnison — I would move that the report be received, and the 
suggestions be adopted. 

The President — It is moved and seconded that the report of the 
committee be received and adopted. All in favor will signify the 
same by saying aye. Contrary, no. 

It is so ordered. Mr. Driffield, will you read the paper? 

Mr. Driffield — Mr. President and Gentlemen: (Reading:) 


The business of fire insurance is one which is peculiarly beset with 
influences and conditions prejudicial to the interests of him who undertakes 
to travel over its thorny path ; influences working strongly in opposition to 
the natural tendency of intelligent man to improve and elevate his profes- 
sion ; conditions tending ever to increase the obstacles, the pit-falls in his 
way. and make traveling at times difficult and dangerous. The mere chances 
of profit or loss, common to nearly all vocations, are not here referred to. A 
minute analysis of these influences is not necessary in order to reveal the 
disagreeable fact that those who are engaged in the business are themselves 
largely instrumental in bringing about some of its bad features, by being 
too readily induced to forsake the beaten path of experience, and to branch 
out into a wilderness of long credit, open insurance, unlimited privileges for 
the assured and curtailed rights for the company. 

Of the evil influences operating from within the business, many are 
susceptible of eradication. Compacts and tariff associations, though formed 
primarily for the purpose of making and enforcing rates and commissions, 
should also be given jurisdiction (as is the Board of Fire Underwriters 
of the Pacific) over several other matters, such as limitation of credit, and 
policy forms and conditions. Many of these rules, however, should be 
unnecessary ; common sense and business judgment should prompt an under- 
writer to decline, for instance, to issue a blanket policy, or to grant permis- 
sion for a mill to shut down for an unlimited period, and without a watchman. 
But that business judgment, unaided by ironclad rules, does not operate to 
a sufficient extent to prevent companies from writing policies in a loose and 
ill-advised manner, is amply evidenced : for example, by the large numbers 
of dangerous mortgage clauses originated by loan and investment companies 
and other money lenders, and accepted by insurance companies, and by 
which the rights of the latter are subordinated to the pleasure of the former. 
Every insurance man knows the value of the contribution and cancellation 
features of the mortgage clause, and that they were included because it 


bad been the experience of insurance companies that such protective meas- 
ures were sometimes found a vital necessity ; and yet how often both of 
these features are lacking in the printed forms reported to the companies. 
Bome mortgage clauses give the mortgagee thirty days' grace after notice 
of cancellation. The fact that such clauses are printed, is proof positive 
that mortgagees experience but little difficulty in securing insurance under 
the conditions imposed therein, the companies being unwilling to make a 
united stand against this growing evil. If sound business judgment is 
impotent in this matter when opposed by competition, would it not be ad- 
visable for the Board of Underwriters to regulate forms of mortgage 
clauses? Does it not appear to be of more importance than the regulation. 
for example, of the form of a policy covering contents of a dwelling ? To put 
such a rule in practice would possibly be a somewhat difficult undertaking, 
but probably not much more so than have some of the radical changes in 
forms accomplished by the Pacific Insurance Union. 

In like manner the open insurance evil has in late years assumed greater 
proportions. Policies in which the amount of other insurance is limited are 
the exception. In these hard times, when the moral hazard is greatly de- 
veloped, and especially in sections where incendiarism is of frequent occur- 
rence, a limit of insurance according to value would protect the companies 
against many an ugly loss. To find a remedy for this evil is a more difficult 
matter than is the case with faulty mortgage clauses, and it is probable 
that it could not readily be corrected by the Board. The practice could 
undoubtedly be improved, however, by the companies themselves, by requir- 
ing local agents to give more attention to it, infoiming the company of the 
value of, and amount of insurance on every risk, and wherever possible, 
placing a limit on the amount of other insurance permitted. In the case of 
stocks or other property, the value of which is frequently changing, the 
limit might be enforced by including in the policy a three-fourths or four- 
fifths value clause. No intelligent underwriter would attempt to belittle 
the importance of such safeguards, but if questioned as to the cause of his 
ignoring such defects, would probably explain it by calling attention to the 
great extent to which an effort to correct them would increase his corre- 
spondence. No doubt there is much reason in this argument, for probably 
eighty per cent, of the daily reports received each day would bear criticism 
in the matter of lack of information concerning the risk and assured, if not 
because of faulty wording and construction. Correction of such methods 
must be made by educating the local agent, and this can be most readily 
done by the special. It is not sufficient to call his attention to the proper 
method, he should be made to understand the reason, and to see that when 
the manager writes him to answer the questions printed on the daily report 
form, or to state exactly the amount of other insurance, he is not over- 
crowding the business with an unnecessary amount of red tape and detail, 
with the sole purpose of harassing the agent and making life a burden to 
him, but is endeavoring to secure information absoluteh T necessary in order 
to form an intelligent estimate of the adequacy of the rate, and the desira- 
bility generally of the risk. The field of observation of the local agent is 
too limited to expect him to appreciate the importance of many of these details. 


without his being educated up to it. His natural tendency is to construct 
the policy loosely as regards the company's interest, but to include a full 
set of permits and privileges for the assured ; in fact anything the latter 
asks for, as, for instance, did the agent who, when writing a church risk for 
an orthodox Methodist parson, added the clause : "Permission granted to 
preach the doctrine of eternal fire without prejudice to this insurance." 

Probably the greatest evils arising from within the business, are the 
paying of rebates and excess commissions, and extended credit. These dis- 
orders it is within the province of "compacts" to correct, and it is probable 
that the Board of Fire Underwriters is doing everything possible to stamp 
them out on this Coast. This should not be so difficult a matter as it is, 
when the discord and demoralization resulting are so very apparent to.all 
in the business. 

But, adopting a course of argument contrary to custom, having investi- 
gated the effects of certain influences, the questions arise, what are the 
causes of all these evils \ and why in a profession in which is found so much 
intelligence, are they not stamped out? Unquestionably, competition is 
mainly responsible, the agent or manager being often willing not only to 
divide the premium, but also to sacrifice some old established safeguards of 
conservative underwriting at the pleasure of the man with a risk to place. 
And these irregularities of the business will never be stamped out, until 
such time as the companies will make a united and firm stand against them. 
Probably in no business is competition naturally so unlimited, so free, as in 
fire insurance, because where the conditions are so multitudinous, so ever- 
varying, no man can positively quote the cost of the commodity he is selling. 
When the phases of the business are different in every town, according to 
the class of the population, construction of the buildings, adequacy of fire 
protection, prosperity, resources, climate and topography, different in every 
class of risk, according to the hazard of processes carried on, of combusti- 
bility, inflammability and susceptibility to damage of various stocks and 
properties, varying at different periods with the introduction of new hazards 
developed by scientific discoveries and inventions, with the rise and fall of 
market values and the briskness or dullness of the times, changing with the 
assured, according to his moral reliability, his carefulness, and even his bump 
of order — where the business is capable of such an ever-varying, kaleido- 
scopic combination of conditions, so that the experiences of no two companies 
and of no two periods agree, what man can draw the line which divides 
profit from loss? What man can say: "Below this point that risk can not 
be written with profit to the company?" Therefore, in a business, the 
varying conditions of which render the probability of profit or of loss so great 
an uncertainty, what wonder is there that one competitor in the race for 
business will underbid another in rate, or in the matter of safe construction 
of the policy. As before stated, united action on the part of all the com- 
panies is probably the only effectual remedy. 

But, as if the underwriter had not troubles enough within his business; 
as if conflagrations great and small, ''compact" squabbles, cuts, rebates, 
non-payments, defaulting agents, broker parasites, and clamoring stock- 
holders would conspire to make the fire insurance man's cup of happiness 


too Pull, and in order to offset in some measure the felicitous state of blissful 
contentment to which these joys might raise him, the dear public, in the 
many ways known to them, impose an occasional penalty. They require 
Large deposits in some States, and then impose taxes and licenses, State, 
county and municipal, which are properly met by increased rates. They 
Legislate in many ways adversely to insurance interests: pass valued policy 
laws, in order, as they claim, to force these " soulless corporations" to meet 
their obligations, and to stamp out incendiarism by necessitating an inspec- 
tion and valuation before the fire, whereas, it is a matter of record that 
such laws increase incendiarism by affording protection to the man who 
wishes to sell out to the insurance company for more than the value of his 
property. They make anti-compact laws, in order to crush out these "grind- 
ing monopolies, trusts, pools," and to protect the public from what they call 
14 their grasping methods," whereas, it is capable of proof that the mainte- 
nance of adequate rates is as important to the public's interest as to that 
of the companies. The credit of the merchant, the security of the money- 
lender, the safety of the property holder depend on the maintenance of fire 
insurance rates on a profitable basis, and that they are not kept too high, is 
amply demonstrated by the resulting figures. They pass laws for mutual 
insurance companies, thus sowing the seed for the growth of what has often 
proved a source of great loss to the insuring public, 

Besides these familiar bills, introduced at nearly every session of the 
legislature of many States, there is generally a motley collection of gro- 
tesque bills presented, the main object of whose promoters is to make it 
warm for the insurance companies. A complete syllabus of these legislative 
curiosities would be amusing reading matter for the underwriter, but a 
painful commentary on the intelligence, and perhaps honesty, of our law- 

In the matter of taxation, insurance companies have been very unfairly 
dealt with by many States. A table published by the National Board of 
Fire Underwriters in 1892, showed the average percentage of taxation to 
net premiums, after paying losses and expenses, to be 21.49, taking the 
States together for the eleven years ending with 1890. This figure, be it 
understood, does not include special taxes, licenses and fees imposed by 
States, counties and towns, and of which there are so many, as evidenced 
on this Coast. Many of the States tax the companies on their gross busi- 
ness, thus requiring them not only to pay a percentage on their expense 
account, but also on that portion of their receipts which must be paid out in 
losses. This method shows a strange result in several States: one case 
will sufficiently illustrate : In North Carolina, there is a tax of two per 
cent, on gross premiums, which (according to the table referred to above) 
resulted in the eleven years ending with 1890, in a tax amounting to £91.700, 
imposed on a business showing a loss of §124,426. Similar bills have recently 
been introduced both at Sacramento and at Salem. 

But, as if all this persecution were not sufficient, they add insult to 
injury, and denounce, through the press, companies and their representa- 
tives alike in no uncertain terms. It is popular; it takes well with the 
masses to heap up invective on the corporation. An Albany. Or., paper says : 


"The Pacific Insurance Union is a combination of San Francisco stock- 
jobbers and manipulators of trust," and it says of the man who defends 
these " confidence sharpers " that " there should be a law to handle him. as 
accessory to highway robbery." A Fresno paper refers to a time when all 
members of the Pacific Insurance Union will be " sizzling " in a region com- 
monly reputed to be hotter even than Fresno. These encouraging sketches 
can generally be found in the local newspapers, shortly after an increase in 
rates in their section. 

But, again turning from effect to cause, why are insurance companies 
selected as the objects against which are directed the shafts of popular 
prejudice? And is such antagonism merited? Undoubtedly a prominent 
factor in the feeling against insurance companies is the very general aver- 
sion to moneyed corporations; and this influence is reinforced by a failure 
on the part of the public to understand the many peculiar features of the 
business, and by their overlooking the fact that most companies carry on a 
business similar to banking institutions, by investing their assets in 
interest-bearing securities. How often you have to explain to the man at 
your counter that there are other sources of revenue from which your com- 
pany draws, in order to pay dividends to stockholders, besides the three- 
year premium which he pays on his cottage ! He has an uncontrollable 
antipathy to dividends (he is not, himself, a stockholder). 

Nearly every policyholder considers his rate too high; he can not see 
how his property can possibly burn ; he is a very careful man, his establish- 
ment is the best constructed and protected in town, and he has never had a 
fire in all these years. The company could well have afforded to insure him 
for the bare expense, for they have never been called upon to pay him a 
loss. He forgets that in insurance the many must pay for the few, and can 
only see that the company is paying big dividends, and that his rate is 
higher than some other fellow's, back East. The originators of the Uni- 
versal Mercantile Schedule, believe that the adoption of that system of 
rating would greatly lessen the antagonistic feeling toward insurance com- 
panies engendered by the discontent of policyholders with the rates charged 
them. There can be but little doubt that this beneficial result would follow 
an application of the schedule, as it would enable a company to demonstrate 
to the applicant for insurance that his rate w^as made on strictly scientific 
and equitable principles, each defect being charged for, and credit being 
given for each safeguard, each feature calculated to reduce the fire hazard. 

The application of the co-insurance clause, has produced much hostility 
toward the companies, especially in some of the Eastern States, where it 
has been more generally used than here. No man likes to be coerced into 
carrying a certain amount of insurance, in order to reap the full benefit of 
his policies in event of partial loss. The Universal Mercantile Schedule is 
calculated also to overcome this source of friction, by formulating its rates 
on a basis of 50 per cent, of insurance value, deducting from this according 
to scale for greater insurance, and similarly adding for smaller insurance, 
thus allowing the applicant to choose his rate, according to the wholesale 
and retail system of mercantile business. Perhaps even a better method 
is the one advocated by some underwriters, of commencing with a maximum 


rate for policies with do co-insurance clause, and deducting from this accord- 
ing to a scale for each 5 per cent, additional insurance guaranteed, commenc- 
ing with 55 and extending to 80 per cent., thus avoiding the necessity in 
risks on which is carried less than 50 per cent, insurance to value, of adding 
to the rate, a proceeding which generally causes friction. 

No doubt an important cause for the popular animosity shown insurance 
c tmpanies is the resistance of claims against them. And this result is 
almost certain to follow to some extent, whether the claim is an honest one 
or not. except in instances where crime is so clearly established as to prevent 
even the local newspapers from taking the part of the assured. It is a nota- 
ble fact and a very unfortunate one. that neither the average newspaper, 
nor individual appear to be able to discriminate between the reputable 
insurance companies and those frequently termed ; ' wildcats." Whenever 
one of the latter refuses payment of a claim, the case is held up to public 
notice as an evidence of the villainy and depravity of the insurance profes- 
sion at large. It is not intended by this to maintain that just claims are 
never contested by the companies of good reputation, for unfortunately this 
has sometimes occurred, but cheap insurance, low-class mutuals and wild- 
cats generally, will be found responsible for much the largest proportion of 
honest claims resisted ; jet each one of these is the signal for a round of 
abuse from the public and press, directed at all insurance companies, and 
probably a large crop of "cinch bills " at the next meeting of the legislature. 

The most deplorable result of the popular hostility toward insurance 
companies is met with in the courts, prejudice being not only evident in the 
findings of juries, but also in the decisions of judges. It is. perhaps, natural 
that, other things being equal, there should be a favorable inclination 
toward the individual, as against the corporation ; it is justice, that where 
there is ambiguity in the phraseology of the contract, any discrimination 
should be to the advantage of the party who did not frame it. but cases are 
not rare in which law, justice, equity and good sense have been disregarded, 
and the decision rendered for an assured who had nothing to recommend his 
case, except his being the weaker party. 

A careful consideration of the conditions operating adversely to the 
interests of fire insurance companies, results in the conclusion that their 
combined influence results in a tendency for the profession to degenerate 
from conservative underwriting to a mad rush for business. The fact which 
saves it from such a fate is that in its ranks are enlisted a large number of 
men of intelligence and brains. Coming near, as it does, to the higher pro- 
fessions, in the amount and diversity of knowledge requisite for the conduct 
of scientific and successful underwriting, it is ever weighted down by its 
indefiniteness, and the naturally absolute freedom of competition peculiar 
to it. Its unwholesome practices and conditions are felt and understood by 
all engaged in the profession: they discuss and write upon them, appoint 
committees to investigate them, pass resolutions condemning them, and 
forthwith underbid each other in these very matters, in order to obtain a 
risk. The only remedy for this condition of affairs is union, and an honest 
union. When insurance companies can maintain a united front, the evil 
methods of the business can be one bv one overcome. But when may this 


millennium be expected ? Present indications would lead to the belief that 
there must first be a loosening of the artificial bonds of competition, until 
many have given up the fight and retired from the lists, those remaining 
being forced to unite for self-preservation. It would be an exemplification 
of the doctrine of "the survival of the fittest. " 


(Applause. ) 

The President — This young gentleman is evidently very loyal to 
his employers, having covered the ground very thoroughly and hav- 
ing defended the companies on every point. 

Mr. Folger — Mr. President, the committee, of which I was one. 
was of course ignorant of the name of the writer of either this or the 
other paper, and preferred to remain in ignorance of it until the 
decision should have been reached by the Association, but during the 
reading I made application to the Secretary of the Clerks' Associa- 
tion to give the name of the writer, and with his permission, I take 
pleasure in announcing that this paper was prepared by Mr. Thomas 
D. Boardman of the ^Etna office. 

(Applause. ) 

The President — His name will be attached to the paper by the 
Secretary in the printed minutes. Are there any remarks? If not, 
we will hear the second part of the subject on which Mr. George P. 
Low is to furnish us a paper: ''How to Inspect Electrical Plants and 
Power Houses. ' ' His first subject will be treated to-morrow morning. 

I wish to say that we are to have a paper by Mr. Ed. Niles on 
"Inspections," which will be read by Mr. George F. Grant following 
this paper. 

Mr. Low — The Inspection of Electric Light and Power Plants. 


The inspection of electric light and power plants is not a simple, nor yet 
a difficult process. It is not simple in that a knowledge of a few electro- 
technical facts is necessary ; it is not difficult in that information concerning 
such facts may be readily imparted — to do which is the object of this brief 

Let two great essentials to safety be understood : First, each interior 
circuit or wire must be so placed as to preclude its being "opened" or 
broken ; and, second, each such circuit or wire must be so placed that the 


current can not leave its own conductor for any other that may be presented. 

The first essential is principally violated by the loosening of screws, bolts 
or other joints designed to permanently hold current-carrying parts of elec- 
trical equipment in hard and intimate contact, for "loose contacts" cause 
extraordinary increases of temperature in conductors that are sufficiently 
Large under normal conditions to carry many times the volume of current 
that will do mischievous heating. To use an analogue: if a wire cable be 
rapidly drawn through a frictionless runway or pipe by an irresistible 
force, no heat will be generated in either cable or pipe; but dent in the pipe 
so that a point of friction will be created and heat will be generated accord- 
ing to the energy absorbed in overcoming the friction, and if necessary the 
entire energy of the cable will be spent in overcoming the barrier — irre- 
sistible motion will be converted into irresistible heat and the cause of the 
friction will be burned away. The occurrence of a loose contact in an elec- 
tric circuit interposes a resistance or an electrical friction which must be 
overcome, and again, an irresistible force in overcoming friction is trans- 
formed into irresistible heat, with consequences dependent upon the sur- 

To continue the analogue yet further, if that cable, moved as it is by an 
irresistible force, is clutched by an obstacle that is unaffected by frictional 
heat, but one result will follow : the cable itself will be heated or even con- 
sumed by its own energy. In electricity, if the conductors in loose contact 
or otherwise become separated, forming an "open circuit" or an absolute 
separation, an air space of infinitely high resistance is inserted in the cir- 
cuit ; the air is altogether unimpressionable, the current flow is not to be 
resisted, and in the hissing, vicious electric arc of immeasurably high tem- 
perature which leaps across the severed terminals, is seen an electric cable, 
seething or finally dissipated in the terrific heat generated by its own 
energy in overcoming the resistance offered to its passage. 

An effort must here be made to eradicate a false, though prevalent, idea. 
The days when overloaded or over-heated wires will be found in important 
electric stations, are over, for the station manager now knows that it 
wastes thousands of dollars worth of electrical energy annually to keep the 
conductors in his station at fever heat. To illustrate : In my personal prac- 
tice I once found an instance where the expenditure of $300 annually effected 
an annual saving of over $1,600 in electrical energy wasted in the useless 
heating of wires to only a moderate temperature. The station manager of 
to-day understands why this is so and his regard for efficiency will do more 
than is necessary to eliminate the hazard popularly supposed to be due to 
overloaded wires. If wires heat, look for a "loose contract," but waste no 
time by searching for overloaded wires in any plant of particular import- 
ance, for you will never find them 

A study of the second essential to safety, or that requiring the placing of 
interior circuits so that the current carried is prevented from leaving its 
proper circuit, leads the mind through a similar course of reasoning. This 
essential requires the use of such materials and workmanship as will pre- 
serve each circuit free and independent from every other circuit ; or, in yet 
simpler words, circuits must be physically and electrically separated each 


from the other. The term "physical separation" is self-explanatory, and 
to accomplish which is a matter of ordinary mechanical work that any one 
may execute; but the term "electrical separation" expresses quite a dif- 
ferent condition. Two nails driven into a wooden beam ten inches apart 
are physically separated, but it does not follow that the nails will be elec- 
trically separated. The beam may be well seasoned and dry ; in which 
event the nails may be electrically apart, or if it be perfectly dry in its 
normal condition, a warm gust of air or an atmospheric change may precipi- 
tate a film of condensation that would reach from nail to nail, and which 
would at once render them in electrical connection. Or, again, the wooden 
beam may be unseasoned, or it may be wet from local conditions, or its 
pores may have absorbed moisture even from the atmosphere, which in 
either event would destroy the electrical separation of the nails by estab- 
lishing a path along which current could travel between them. Naturally 
this path, being, so to speak, new and untrodden, will be a poor one ; or, in 
electrical terms, it will constitute a high resistance "leakage," and if cur- 
rent be made to flow from nail to nail, once more the irresistible electric 
cable encounters resistance, frictional heat is generated and the wood is 
ignited. Clearly, then, the physical separation of electric circuits does not 
form adequate protection. Nevertheless it is necessary. 

Electrical separation in wiring is commonly effected in three different 
ways, viz : (1) By air spaces, (2) by the insulating coverings of wires, 
and, (3) by the use of insulating supports, such as glass or porcelain insu- 
lators. To discuss these features at length would be redundant, as they 
have been exhaustively treated in the various papers heretofore read be- 
fore this Association, but a few points are worth reviving : An inch of air 
is practically as good a separatian as ten inches of air, provided the wires 
are so placed in each instance that they cannot be brought into contact or 
otherwise "crossed." The greatest enemy to safety in wiring is moisture, 
and the only flexible and durable material having high insulating qualities 
that will withstand moisture is rubber or the compounds allied to it. These 
should be used exclusively for the insulation of all inside wiring, despite 
their inflammability. 

Wires should never be permitted to touch anything save their insulating 
supports; hence it follows that insulating tubes or bushings must be used 
wherever wires pass through w r alls, floors or partitions of any description. 
The hazard of wood base cutouts, switches, etc., is so well understood that 
there is no occasion for making further effort to show the necessity for in- 
variably ordering their immediate removal. 

It is advisable that the switchboard should be constructed of marble or 
some equally non-inflammable material, but wood may be used with safety 
if all instruments are: (1) mounted on marble or slate bases, (2) if all wir- 
ing is constantly exposed to sight, and (3) if there are no concealed spaces 
about the switchboard. Aside from these particular requisites, safety in 
switchboards consists not only in avoiding loose contacts and open circuits, 
and in maintaining perfect physical and electrical separation between con- 
ductors, but in preserving the switchboard absolutely sacred for the uses 
for which it is designed. To use the back of the switchboard as a locker for 


storage of supplies or as a wardrobe in which to hang clothing, is a sacrilege 
never to be tolerated. Above all, absolute and scrupulous neatness in and 
about the station is necessary. 

It is not the province of this paper to deal with those features of inspec- 
tioD which, by their nature, are purely within the domain of the special 
agent of the compact surveyor, which affords a reason why no reference is 
made to those details in the inspection of electric light or power plants that 
pertain to all mercantile or manufacturing risks as well. The matters of 
tire protection, building construction, water supply, elevators, stairways, 
storage of supplies, oily floors, w T aste cans, etc., require no special consid- 
eration beyond pointing out the facts that electrical supplies in themselves 
present no features of unusual hazard, and that inasmuch as oil is one of 
the best insulating materials known, it must not be considered as offering 
any of the hazards peculiar to water or dampness. It is a fact that with 
exceptions of this nature and such as are herein indicated, that nothing is 
presented in the inspection of an electric plant that is not met in every 
manufacturing risk containing rapidly moving machinery, oily floors, and 
more or less readily ignitable material. In fact from the fire underwriters' 
standpoint the similarity between a properly conducted electric light or 
power plant, and a well designed cotton or wollen mill is marked. 

Thus far it appears as though the opinions expressed to the effect that 
the generation of electrical energy produces ozone in such quantities as to 
warrant the branding of electric stations as eminently hazardous, are based 
on theory rather than as a result of practice or actual investigation. It is 
true that fires occurring in electric stations have enveloped the whole 
structure with great rapidity, but there seems to be no well grounded rea- 
son for laying emphasis on the belife that rapid or quick fires are more pe- 
culiar to electric plants than to other manufacturing risks. 

In this connection a general analysis of the causes of fires in electric 
stations, and which have come under the knowledge of the writer, will 
afford an idea as to those points in central station practice requiring special 
attention : 

Cause i. Fire crept from the ash boxes under boilers to an adjacent pile 
of sawdust used as fuel. 

Cause 2. Drunken fireman fell asleep and station set on fire by burning 
embers dropping from door of fire box or from ash box. 

Cause 3. Presumably from pile of excelsior, paper and other litter which 
had been allowed to accumulate in store room. 

Cause 4. Presumably spontaneous combustion from oily waste in pockets 
of clothing hung behind switchboard. 

Cause 5. Globules of melted copper from the brushes of a defective dy- 
namo, dropping upon the oily floor. 

Cause 6. Loose contact in low potential incandescent lighting con- 

Cause 7. Loose contact or open circuit in the wire connecting a light- 
ning arrester to ground. 



Cause 8. Accumulation of oily waste. 

It is not to be presumed that I can offer a single word of advice to the in- 
surance surveyor on the proper method of procedure to inspect a manu- 
facturing risk, but when he comes to an electric station, I would admonish 
him to remember that he is still dealing with a manufacturing risk, con- 
cerning which there is nothing to be considered as bewildering, mysterious 
or supernatural. Let him apply a homely simile to everything; let him re- 
member that an arc lamp, for instance, is but an open flame that occasion- 
ally drops flakes of hot carbon or globules of heated copper. Above all he 
should never be reluctant to apply to his electrical adviser for any informa- 
tion he may desire. You have no room in your heads for volts, and ohms 
and amperes and kilowatts, but you have room for and can and must learn 
that each and every electrical condition or effect has a simple analogue, that 
when properly expressed, will clear every ambiguity from the horizon of 
electrical inspection. 


The President — The mover of the committee on President's ad- 
dress has named the following to serve thereon; at my request: 
Messrs. W. H. Lowden, A. G. Dugan and L. B. Edwards. 

Are there any remarks, on the paper read by Mr. Low? We 
usually cross-examine him after he has read a paper. 

(No remarks.) 
The President— Mr. Stuart is not present this afternoon. Mr. 
Wetzlar has not yet arrived. Mr. Folger has asked to have his 
paper go over until to-morrow morning. I therefore now take great 
pleasure in calling upon Mr. George P. Grant, who will read the 
paper on "Inspections," by Mr. Ed. Niles, who is absent from the 

Mr. Grant— Mr. President and Gentlemen: Mr. Niles has written 

as follows: (Reading:) 


"All that is wise has been thought already. 
We must try, however, to think it again." 

Speaking of certain vicious men of elegant exterior, Balzac compares 
them to poisons that are put up in cut glass vials, neatly covered with kid 
and handsomely trimmed with ribbon. The vehicle is beautiful but the 
contents are deadly. Many fire hazards, that have a similar pleasing ap- 
pearance, are saturated with a moral virus or contains the seeds of quick 
consumption. The inspector who intelligently examines the risks in his 
territory may aid in placing a balance on the right side of the ledger; in 
fixing his manager more firmly on his seat and in elevating his company to 


the ranks of those who through much tribulation have at last achieved a 
Law Loss ratio. If the business of the company is otherwise conducted on 
Intelligent principles, the close inspection of hazards must contribute to 
success under ordinary conditions, aside from the possibilities of sweeping 

Although somewhat foreign to the subject, it may be well before going 
further, to explain what is meant by conducting an insurance business on 
•• intelligent principles," premising that these views are not copyrighted 
and may be freely taken by any one. 

In brief the following points are covered : 

The management is discreet and consistent, based on a policy that is 
sufficiently flexible to meet the varying conditions, but is not dogmatic, 
mulish or vacillating. 

The Compact obligations are observed. 

Local agents are treated with fairness and courtesy but are pleasantly 
yet firmly reminded of their responsibilities, and are strictly held to their 

' The prompt remittance of collections is enforced. 

Special agents are placed on a cordial footing but are not allowed to fall 
into wasting diseases through a lack of exercise. They are not encouraged 
to make complaints of other offices and are expected to keep their own skirts 

All letters and telegrams are answered promptly. 

The manager's desk is cleared daily. 

The lines carried are proportioned to the general income and to the con- 
ditions of the various cities and towns in the manager's territory. 

Wrangling with other offices is avoided. 

The prohibited list is small but invulnerable. 

Orders for cancellation are imperative and their immediate enforcement 
is insisted on. 

It has been said that "to select well among old things is almost equiva- 
lent to inventing new ones." There is nothing new to be said. "A story, 
bless you, there is none to tell." At this meeting, there are those who 
have that keen scent for the dangerous point in a risk that enables them to 
fasten on it unerringly, and to such, these suggestions will be of no value. 
But if some inspectors are born, and leap from the cradle with a nursing 
bottle in one hand and a cancellation notice in the other, more are made, 
and it is not unlikely that these words will reach some field men of limited 
experience to whom the points referred to may prove of benefit. The writer 
claims no spark of originality and it is simply as a borrower of others' 
thoughts and as a condenser of others' ideas, that he has consented, like a 
fly embalmed in amber, to rest with the immortals whose annual crop of 
ideas is to be preserved in the printed records of this Association. 

Inspectors, like the Arctic regions, are designed for exploring purposes 
only, and every inspector worthy of the name, should be an explorer into 


the dark and devious recesses of the various hazards that his company, with 
faith in its agents and the map, accepted. The nicely colored diagrams all 
look alike, but there's often a big difference in buildings of the same size 
and material, and a decided choice in occupancies. 

The first quartz mill that I inspected, seemed to my verdant eye, very 
hazardous, owing to the large amount of dust in the mill. In some places 
the timbers were covered a half inch deep. Reasoning from a flouring mill 
basis, I felt that there was danger in the very air and was pained to see 
such carlessness. I spoke to the superintendent about it and the rude man 
laughed in my face. "Why," said he, "that's all metalic dust. You can't 
burn it." 

" Then felt I like some watcher of the skies, 
When a new planet swims into his ken. 11 

The inspector must often read just his ideas and be ready to pluck the 
flower, safety, from the nettle, danger. 

The tariff rate is supposed to cover the physical hazard only, but what 
rate shall cover the moral hazard? Where the morale is suspected there is 
but one wise course to follow and that is immediate cancellation. How 
often has it happened in the experience of managers and special agents that 
a risk has been allowed to remain on the books when not fully approved and 
it burned. Comment is unnecessary. 

De Quincey in his essay on "Murder Considered as One of the Pine 
Arts," says: "If once a man indulges in murder he very soon comes to 
think little of robbery, and from robbery he comes next to drinking and 
Sabbath-breaking, and there is but one step from that to incivility and pro- 
crastination. Once begin upon the downward path you never know where 
you will stop." 

And so it is with the inspector. If he makes a careless survey of a 
shingle mill, he soon glances at the soap works from the sidewalk, passes 
idly by slaughter houses and mattress factories, and from them it is but a 
step to never looking at brick mercantile risks and gilt-edged dwellings. 

Tact must be used when pointing out defects in risks to property owners. 
Many are sensitive and often cannot or will not, see the dangerous points. 
The inspector should remember the advice John Jacob Astor gave to a 
young business man: "Keep cool, keep civil." Thoroughness is most 
essential. Dickens understood this, for he said : "Whatever I have tried to 
do in my life, I have tried with all my heart to do well;" and if dis- 
heartened in your attempts to improve the condition of your hazards, don't 
get discouraged, for "time and patience change the mulberry leaf to satin." 

The first Rothschild made it his rule to have nothing to do with an un- 
lucky man, and at the risk of occasional injustice it will be well to carry 
out this idea in our business. When it is clearly shown that the assured 
has had two fires as the result of carelessness, cancel at once and let some 
other company carry the hazard which no obtainable rate will cover. 

As "from the same materials, one man builds palaces, another hovels," so 
on the same kind of hazard, one owner will use an honorable care to protect 
his property and another will by his slovenly ways be a perpetual menace. 


When the assured persistently refuses to make the improvements sug- 
gested by a competent inspector, it will be more profitable to give him a 
return premium than to close your eyes and take the chances. After all. 
what satisfaction is there in a large volume of business and a swinging loss 

Another point to be remembered by the young inspector is, that no ad- 
vantage results from telling one's business to other special agents. Advise 
your office freely and stop right there. You will also find that your success 
as an insurance man will depend less on talent and more on energy. 

It doesn't help matters any to get angry with obtuse property owners. 
Remember that some of them "live so happily with their self love that it 
would be cruelty to disturb them," and he who cannot command his temper 
should not think of being a man of business. 

It is discouraging to cancel a risk and not have it burn immediately, but 
in most cases, if your judgment is of an average quality, you will find that 
in due time the conscious or unconscious carelessness of the assured will 
effect the destruction of the property. 

Barnum used to tell the story of a certain showman who combined with 
the ordinary circus performance a display of fireworks. 

At one time, he advertised the "Battle of Trafalgar*' with burning 
ships, blazing oceans and other magnificent effects. He drew such a vivid 
picture of that great naval encounter that the people from the entire 
countryside were attracted to see it. 

When the time arrived, the showman brought his guiding hand to bear 
on the set piece, applied the match in the usual manner and retired to 
await results. 

Several minutes passed, but no battle ensued. The showman then 
stepped forward and addressed the crowd. 

"It has not went off," he remarked, and proceeded to investigate. 

Again the same result followed, and again. "It has not went off, ladies 
and gentlemen," continued the showman. "I will now show you the great 
earthquake of Lisbon." He gathered the fireworks together and filled a 
barrel with them. He poured turpentine over them and sprinkled the lot 
freely with gunpowder. Once more he applied the torch with astonishing 
results. There was an explosion, and when ail was over he gave a parting 

"It has went off, ladies and gentlemen, and so has three fingers of my 
hand. Good evening and many thanks. The earthquake will not be re- 

A prominent special agent, whose headquarters are at Denver, told me 
that when he first w r ent on the road, he knew the difference between a 
shingle machine and a refuse burner, and the points of variance between a 
friction clutch and a watchman's clock, and that was about all. As he 
visited the various risks, he confessed his ignorance and willingness to 
learn. He is now one of the most competent inspectors in the East. If our 
special agents will work in this spirit, their companies will soon have an in- 
telligent idea of the risks they retain and in many cases will be relieved of 
dangerous liabilities. 


My limits will not admit of much detail, and indeed, the intent is to be 
more suggestive than technical. At the risk of repeating what the ma- 
jority of our members know, I will refer briefly to points about various haz- 
ards that it may be well to remember when inspecting: 

Agricultural Implement Factories. — Oily rags should be gathered up daily, 
placed in metal cans with metal covers and burned in furnace. Sand, in- 
stead of sawdust, should be used as an absorbent. Look for dirt and rub- 
bish where spontaneous ignitions may happen, and be alert to discover to 
what extent the risk is protected against sparks. 

Asylums. — Nearly one-half of the inherent hazard is from defective flues. 
Examine heaters closely. 

Barns.— Matches and sparks cause most of the fires. A new hazard was 
recently developed in Oregon. A farmer drove into his barn at night, left 
his lighted lantern on the wagon box, and climbed into the loft to put down 
some hay. An owl flew out, hit against the lantern, and knocked it down; 
the lantern broke, the flames communicated, and the barn was a total loss. 
The lesson seems to be that owls and lanterns must keep out of barns. 

Blacksmith Shops. — The greatest danger is from sparks. 

Breweries. — Sparks, dust explosions and friction in machinery are the 
principal causes of fire. 

Bakeries and Confectioneries. — The fires are often caused by floor and ceil- 
ing joists being placed too near ovens. The joists should be at least four 
inches from brick work. Electricity generated from large belts has been 
known to ignite contiguous woodwork. 

Churches and Dwellings. — Defective flues and furnaces poorly set cause 
most of the fires. 

Dyeing and Cleaning Establishments. — The cleaning room should be de- 
tached, the building should be well ventilated, and the drying should be 
done by cold air. 

Dry Goods and Clothing Stores. — A celebrated Eastern authority attrib- 
utes many fires in these stocks to an inherent Semitic hazard. Without 
touching on that point it is apparent that gas jets, lamps and matches are 
the principal physical causes. Open gas lights should not be allowed in 
windows where open stock is displayed. They should be protected by wire 
hoods, and swinging jets protecting from wooden supports in any part of the 
store, basement, closet or otherwise, should be wired stationary. Wood- 
work over gas jets, when nearer than 15 inches, should be protected by a 
sheet of metal with a small air space at the back. An ounce of prevention 
holds more than good in mercantile establishments. Pails of water should 
be distributed throughout the store. Goods should not be hung over the 
light shaft or piled on the stairways, for fire has always an upward ten- 

Electric Lights.— A few of the leading points with which the inspector 
should be familiar are as follows : 


Arc Lamps where hanger boards are not used, should be hung from insu- 
lated supports other than their conductors. 

Conductors must be so spliced or joined as to be both mechanically and 
electrically secure without solder. They must then be soldered to insure 
preservation and covered with an insulation equal to that on the conductors. 

When from the nature of the case, it is impossible to place concealed 
wire on non-combustible insulating supports of glass or porcelain, the wires 
may be fished on the loop system, if encased throughout in approved con- 
tinuous flexible-tubing or conduit. 

Incandescent lamps run in series circuits must not be used for decorative 
purposes inside of buildings. 

Neutral wires in the Edison tube system should not be grounded as such 
a practice impairs the insulation of the wiring of the whole portion of each 
building lighted therefrom. 

Many fires are caused by foreign currents entering buildings on outside 
overhead wires, normally forming an innocuous circuit, but which become a 
source of fire hazard if crossed with other conductors, as thereby they be- 
come charged with a relatively high pressure. 

Furniture Factories. — To those about to write on furniture factories, 
"Punch's" advice to the young man about to get married may suggest it- 
self. It was, "don't !" But if you favor them, see that care is used in the 
disposition of the rubbing rags and in handling the oils. Sand should be 
used as an absorbent under the oil and varnish barrels and changed often so 
the drippings will not accumulate and saturate the flooring. Open lights 
must not be used. 

Foundries. — The charging floor around cupola should be of iron and the 
chimney should be well ventilated where passing through the roof. Report 
on amount of patterns and learn how many are of obsolete design. 

Flour Mills. — Friction and spontaneous combustion are the main hazards. 
Examine the machinery for hot bearings and while doing so, note if there 
are machines of old pattern not in use. See that your policy covers machin- 
ery in use only. Insist on cleanliness. If the machinery is badly crowded, 

Grain Elevators. — These generally burn from locomotive sparks, friction 
in machinery and spontaneous combustion. 

Hotels. — Defective flues, stoves, lamp explosions and drunken guests are 
the principal points to be guarded against. 

Livery Stahles. — Smoking, lamp explosions, and defective flues cause most 
of the fires. 

Laundries. — The principal hazard is the dry room. All pipes should be of 
metal with hangers raised high enough from the floor to allow of cleaning 
underneath, and the stoves should be set on zinc. 

Meat Markets. — Rendering should be done in a separate building, or the 
floor should be metal covered and lard kettle should have a metal cover so 


arranged that it can be dropped down if the grease boils over. There should 
be a box of sand for use in case of fire. 

Printing Offices. — Benzine used in cleaning type should be kept in tight 
metal cans. A quart is an ample supply to be kept on hand at any one 
time. The office towel ought to be changed two or three times a year. 
When stereotyping is done, care should be given to the setting of the furn- 
ace, which should be encased in brick with the surrounding woodwork, and 
the floor fire-proofed. Presses should stand on zinc or cement, and the floor 
kept clean of oil. 

Paints or Oil Stocks. — Spontaneous combustion is the principal hazard. 
See that oil is not near lamp-black. A drop of oil in a barrel of lamp-black 
may occasion what the local agent gave as the cause of the fire, "instan- 
taneous combustion." 

Steam Heating. — Unprotected steam pipes where passing woodwork are 
as dangerous as furnaces. Tyndall demonstrated that pine carbonizes at 
250 degrees. After carbonizing, if the steam in the boilers exceeds this 
heat, there is danger of ignition. When the steam pressure on the boiler 
is 20 pounds the heat equals 228 degrees ; with 40 pounds pressure the heat 
is 260 degrees, and with 80 pounds pressure the heat is 315 degrees, so when 
the pressure gets up to 30 pounds it will readily be seen .that the steam 
pipes must be looked after without delay. Pine not carbonized ignites at 
600 degrees. Steam pipes that pass through wood, or lath and plaster par- 
titions, or through floors, should be wrapped with asbestos or have a clear 
space from the woodwork of at least one and a half inches. 

Saw Mills and Planing Mills. — Shavings vaults should be of brick, with the 
walls at least five feet higher than the other portions of the mill. Stand- 
ard fire doors should be placed on all openings into the boiler room. Steam 
pipes in dry kilns should be on iron hangers and not in contact with wood- 

Smelters. — A standard smelter in easy circumstances is a good risk. The 
principal hazard is the proximity of the timbers to the furnaces. If the 
timbers and charging floor are of iron and the plant is well located, with 
contiguous paying mines, you may, with a clear conscience, write "ap- 
proved ' ' on your inspection slip. Chlorination and lixiviation works have 
this advantage over smelters, that the gases arising from the acids used so 
impregnate the timbers and atmosphere as to have a deadening effect on 

Theaters. — Examine scenery loft and arrangement of stage and lights. 
The drop curtain should be of asbestos and on each side of the stage should 
be a standpipe with connections for hose both on stage and scene loft', with 
pails of water on main floor. Employes should be stationed in the loft dur- 
ing performances. The preference may be given to theaters making a spec- 
ialty of ballet preformances, owing to the limited stock of costumes re- 

Don't mark a risk "drop at expiration," or the time will surely come 
when you will feel the pangs of remorse. If you don't like it cancel at once. 


Make full reports about the town, the status of the agency and the con- 
dition of the fire department and water supply. 

Ye managers who rest at home on flowery beds of ease (with, perchance. 
a crumpled rose leaf or two in the couch of late), do you realize what your 
special agents are trying to do for you? They are the pioneers, the pros- 
pectors. tlu 4 advance guard of insurance civilization. They make the rough 
places smooth and are expected to be as wise as serpents and as harmless 
as doves. They collect the overdue accounts; they soothe the wounded 
spirits of your agents; they inspect the dubious risks that you innocently 
accepted ; they adjust your losses with a supposed knowledge of men worthy 
o\' a Napoleon, and an idea of values creditable to a Hebrew pawnbroker. 
They retire your bad agents and appoint your good ones. They stimulate 
and solicit business in season and out of season. Strangers to continuous 
domestic joys and the sweet comforts of home, in summer they swelter in 
the path of the sirocco that the north wind wafts through the San Joaquin 
valley, and in winter they buffet the icy blasts of Montana or soak in the 
perennial showers of evergreen Oregon and Washington. 

In behalf of those golden links in the insurance chain that binds the 
agent to the manager, may not that kind, considerate and just treatment 
that most of them receive, be extended to all? Cheer and encourage them: 
write appreciative letters ; give them full counsel and advice ; and they will 
rise up and call you blessed ; that noble army of martyrs will praise you and 
in their wake will follow good business with premiums collected and remit- 
ted, and you and your contingents shall reap where you have sown. 

As I near a close, I would add that my first intention was to disarm crit- 
icism by filling this article so full of facts and statistics that when printed 
it would not be read. Although spotted here and there with arid patches, 
a careful observer may detect traces of a lighter vein. The only excuse for 
this is that, although we have had some unpleasant experiences of late, it's 
just as well to whistle when passing a graveyard — besides, dentists, under- 
takers and insurance men find it easy to be cheerful under adverse circum- 

In conclusion, as illustrating the difference of opinion between the in- 
spector who points out the dangerous feature, and the assured who cannot 
see it, and the consequence that often follows. I will take the liberty of 
repeating a story, that among other points has age to recommend it. 

The scene is London. A ragged urchin stands in front of a peep-show in 
the Strand. The lad has just paid his penny and is now standing on tip-toe 
to look through the little aperture at the wonderful panorama within. 

••You see, sonny," said the showman, "the train of cars comes along 
this side, then it goes out of sight through the tunnel, and then it comes 
out again on the other side. Where you see a green light it means ' all 
right,' and where you see a red light it means 'danger*." 

" What's the yellow light mean?" piped the urchin. 

••There ain't no yellow light, sonny," replied the man. 

14 Yes there is, mister," said the boy. 

" Oh no, sonny. There ain't no yellow light in this show. Where you 
see a green light, it means 'all right,' and where you see a red light it 


means 'danger.' There ain't no yellow light, sonny." 

"But there is, mister," responded the urchin; "what's the yellow light 

The showman evidently decided that the easiest way to satisfy the 
youngster's curiosity was to take a peep into the show himself. He looked 
in and quickly discovered what the boy meant. 

"The yellow light, sonny, means that the whole blooming show is on 
fire, and future performances are indefinitely postponed." 


(Applause. ) 

The President — Mr. Niles has added to our records another one 
of those very excellent papers for which he has become famous, and 
I am sure we are under many obligations to him. 

Is it your pleasure that we take up anything further this after- 
noon ? 

Upon motion, an adjournment was taken until 10:30 A. M. Wed- 
nesday, February 20th, 1895. 



Wednesday. Feb. 20. 1895. 
10:30 a. m. 

The President — Gentlemen, come to order. I think it was 1111 
fortunate that we fixed the hour at 10:30. because if fixed at 10 all 
would probably have arrived by 10:30. 

I have several disappointments in store for you this morning-. 
The paper from Frank D. Brown, of Missoula, has not yet been re- 
ceived. Mr. Low has asked to be excused from reading his second 
paper. Mr. Stuart, I do not see present. And. unfortunately. Mr. 
Medcraft this morning' informed me by note that he would be unable 
to have his paper on 4i Lines'' ready. I sent him an urgent request 
to come here in any event and participate in the discussion on Air. 
A.r gall's paper, which follows the same line, and I am pleased that 
Mr. Medcraft is present. 

The first paper this morning, unless there is some business the 
Secretary has to bring before us 

The Secretary — When you shall have finished, Mr. President. 

The President — We will take up the business the Secretary pro- 
poses before proceeding with the programme. 

The Secretary— Mr. President, I have been requested on the part 
of certain members here, likewise some who do not appear to be 
present, to say a few words, but had indulged the hope that another 
might be chosen who could respond more fittingly to the inspiration 
of the hour. The Secretary is generally expected to complete these 
offices and respond to the unexpected, therefore he is with you. On 
behalf of those who are instrumental in this it was agreed that I 
should say that our worthy President has been with us in every- 


thing, our ups and downs, our ins and i; outs, " especially the latter. 
His genial face has in the past presided over our meetings, casting 
smiles o ? er our troubled countenances. We have had his counsel, his 
advice, and likewise his censure — a little of it! I believe it is cus- 
tomary to premise the presentation of a gift with some such re- 
marks, but you know their spontaneity, and that they are from 
the heart, therefore, kindly excuse me from further effort. On 
behalf of friends, Mr. President, accept this dainty pen, as a souvenir 
and token of regard! May it sign many policies and pay the losses 

(Presents enormous pen and holder. Laughter and applause.) 

The President — Mr. Secretary, and fellow members: I am unable 
to find words to express my gratitude for this mark of your esteem . 
It is particularly appropriate at this time, as I have been needing 
something to mark the names of those who have failed to comply 
with their promises, to take part in the programme. And now that 
I am provided w T ith a gold (?) pen, the only thing lacking is a barrel 
of ink, and if you will accompany your present with 

(The Secretary hastens to comply.) 

The President — With that commodity I will take great pleasure 
in using this pen for the first time in the interest, or against the in- 
terest, of the Association. I appreciate very highly the kind remarks 
of the Secretary on behalf of the members, and this shall be treasured 
among the mementoes of this notable year. Again, gentlemen. I 
thank you. 


Mr. Fogarty — Behind your ear. 

The President— I don't know whether my ear is large enough: 
there is very little hair on my head and the pen is of goodly size. It 
takes both hair and ear together to hold a pen. 

We are to be favored this morning by Mr. Herbert Folger with a 
paper on '"Fire Losses in American Cities," instead of i; Fire Insur- 
ance in Large Cities." which was a misprint on the programme. 

Mr. Folger — (Reading:) 



The writer of a very interesting paper read at our last annual meeting 
took for his text, "Extravagance in the settlement of partial losses," and 
referred more particularly to small fires, seeming to hold the opinion that 
such losses represent the major portion of the property value destroyed an- 
nually. An attempt will be made through the present paper to interest 
you in losses of large size, which we think responsible for three-fourths of 
the American fire w r aste. Your attention was drawn to the inference that 
out of 29,332 fires in the United States in 1892, 24,346 fires involved losses 
not exceeding 20 per cent, of value ; but no showing of the amount of loss 
was made. It appears that while the fire loss for 1892 was 8151.516,098, the 
small fires, though 83 per cent, of the whole number, were estimated to 
have caused only 22 per cent, of the entire loss, say §33,677,240. 

Much time has been spent in an effort to procure reports of fire depart- 
ments from some seventy-five or more American cities. Only half the num- 
ber have responded and the reports differ so much in plan and detail, that 
many are of no assistance whatever. Still, a statistical table has been pre- 
pared covering an average of iive years for each of about thirty cities, 
which will be published with the proceedings of this meeting, showing both 
the aggregate losses, and those caused by single fires involving 810,000 loss 
and upwards. The table leads to the conclusion that 1% per cent, of all 
fires in large cities are over $10,000 in extent, and that this class involves 
72 per cent, of the total loss incurred. 

It would require more time than can be allotted to one writer to con- 
sider even a few of the questions raised in the course of this inquiry. 
There is ample ground for the preparation of several papers in the future. 
However, it is believed that nothing can be elicited of more interest or im- 
portance than the inference that the chief cause of the enormous fire waste 
in the United States is the defective construction of mercantile brick 
buildings. In the first place, of the 1.578 fires tabulated herein over 90 per 
cent, of the whole started in or mainly affected brick or stone buildings. 
Most of the remaining fires could be discarded from consideration without 
seriously affecting the results. 

The first item of interest in connection with fires in brick buildings is 
the character of the latter. About 29 per cent, are set down as occupied 
exclusively for manufacturing, 63 per cent, as mercantile or office risks, in 
some cases including manufacturing, and 8 per cent, miscellaneous. 

It is to be regretted that lack of time has precluded the segregation of 
insurance losses on buildings and contents. As item after item in the fire 
department reports merely reads "store," or "mercantile," a satisfactory 
classification is out of the question. The average number of buildings in- 
cluded in any one mercantile fire over 810,000 seems to be about 4. 

If memory is correct it was a Cincinnati architectural journal which ex- 
pressed the belief that the increasing fire waste, in the face of constant 
improvement in buildings and appliances for fire prevention and extinction, 
must be due mainly to the faults in construction of buildings erected 
twenty years ago or more. The editor naturally considered it improbable 
that modern buildings of fire proof and fire resisting construction could be 





.-.*■*■;. •.. 




' a 




in any degree responsible for or associated with the present deplorable fire 
loss. But the editor overlooked the large number of fire traps in contrast 
with every first-class building, which are built in the United States annu- 
ally. Only one attempt to consider this feature has come under the 
writer's observation, which had reference to the Milwaukee conflagration 
of October 28, 1892. According to the tables, there were 81 brick buildings 
included within the limits of the burned district, ranging from one to 
thirty-nine years of age, the average being fifteen years. The Bub & Kipp 
building which was the direct cause of the conflagration, was one year old. 
and was the only building over five stories in height in the district with 
one exception. It was 120 feet square and seven stories or 103 feet high 
from sidewalk to roof. There were 309 windows, the area of the window 
openings being 14,505 square feet. There was no party wall whatever in 
the entire building, and it was completely filled with parlor frame furni- 
ture in course of completion. It was equipped with ladders and stand-pipes 
which were supposed to be of value; but the fire did not originate, or show, 
on the outside until the building was a mass of fire from cellar to roof, as 
well as through the roof in a few seconds. There were five engines placed 
at and working from a cistern within 50 feet of this building, with ten men 
working the engines; and they had to run for their lives, leaving engines 
and apparatus, when the fire burst out of the building. The fire destroyed 
440 buildings in all, 185 freight cars, two freight houses and an office build- 
ing of the Chicago & N. W. Co., and left 1,893 people homeless. 

Many similar examples of reckless construction can be found in depart- 
ment reports although they have not caused such sad havoc. We are apt to 
overlook the peculiar susceptibility to damage which is a feature of modern 
office and mercantile buildings. They may seem comparatively free from 
inherent hazard, but a fire once started is apt to be no light matter. The 
Chicago Athletic Club Building is perhaps the most notable case of the kind 
recorded in the past few years. A fire therein occurred November 1, 1892, 
before its completion, involving loss estimated at $180,000, with insurance 
of $300,000. The building was of steel frame construction, ten stories high, 
80x172 feet, with side and rear walls of solid masonry and front walls with 
iron columns running from top to bottom. No part of the building fell ; but 
the terra cotta and stone front, the fire proofing, and iron work in exposed 
places were damaged. Architect Cobb said before the Illinois Chapter of 
the American Institute of Architects : 

"The fire shows that with our present system of construction, it is not 
safe to have a hot fire in a building. Second, terra cotta fire-proofing needs 
to be better secured in place than under present methods. The columns in 
the solid brick front walls were not affected by heat ; cement laid on n 
coats, that were considered solid, came off in layers. If the firemen had 
kept out of the building it would not have been so badly damaged. The 
water thrown on the hot material wrought greater damage than heat alone. 
I was greatly disappointed that, although the building appeared to have 
been saved from destruction, it was very seriously damaged. Only for the 
terra cotta protection, the action of the water on the steel beams would 


have pulled the building to pieces. The fire proofing saved the building. 
but in doing so was itself destroyed." 

The Bize of brick mercantile buildings varies with the size of cities, but. 
as might be expected, large losses are apt to occur in buildings having more 
than tlio average height or area. Yet only two fires have been noticed in 
the reports collected which started in buildings as high as ten and twelve 
stories; the Athletic Club building in Chicago and the Lumber Exchange 
building in Minneapolis respectively, both regarded as fire proof in the 
modern acceptance of the term, and both of which caused heavy loss. The 
absence of fires in Chicago office buildings of from 150 to 300 feet in height 
has been often remarked, and the fire marshal of Chicago read a paper re- 
garding their hazard before the Northwest Association in 1892. While he 
was of opinion that these buildings are practically fire proof, so far as in- 
ternal hazard is concerned, he had some doubt of being able to handle a fire 
efficiently later than eleven o'clock at night, when the elevator service is 
discontinued. In buildings of ordinary construction and average height, 
nearly all fire department reports show that wooden stairways, light wells. 
and elevator shafts in particular, assist the spread of fire with marvelous 

The question naturally arises whether the rapid increase in fire losses 
per annum is due to a greater number of fires in proportion to the popula- 
tion or to an increase in the value of property affected and destroyed. 
Answering this thought, the chairman of the Fire Patrol committee of New 
York said in his report for 1887 : 

"An erroneous idea prevails in regard to increased value of individual 
property as compared Avith values prevailing some sixteen years ago. The 
great increase in the number of buildings, manufacturing plants, stock of 
merchandise and dwellings, show an accumulation of value in mass, but not 
in individual cases. Referring to our records for the period named, we 
find that the average amount of insurance involved where fires have oc- 
curred is less to-day than it was in 1872, while the number where loss has 
been sustained has increased 152 per cent, and the insurance involved 
121 per cent." 

At the first -glance, the writer seems to have made out a case : 
but general statistics are always misleading, and, if the insurance 
were segregated as the losses have been in the tables depended upon for 
this argument, it would probably be found that the average insurance per 
fire in the group of losses over $10,000 has largely increased in twenty 
years. In the report for 1888 there appears an interesting inquiry into the 
value of insurable property in the New York dry goods district, showing 
that the estimated value of insurable property therein was then 8180.229,- 
629. But the statistician obtained these figures by dividing the insurance 
involved in the district during the preceding year by the number of build- 
ings affected (99) , obtaining an average per building of £110.164. ^°t 01Q ly 
does this look too small, but it is disproved by the report itself. The most 
notable fire in New York during the year involved insurance of 82.109,110. 
Sixteen buildings were concerned which would represent an average of 
8131.820 per building. But in this fire, the loss was largely confined to five 






^0* ■BKHHa M|Hii 



rf** *\ 









66 FT. WIDE 



buildings, and seven presented no schedule of insurance on contents. The 
remaining* nine buildings and contents carried average insurance of $203,- 
000 which is nearer the mark. But this figure is far below many lines car- 
ried in New York, as several conspicuous examples in the reports will prove. 
It is not many weeks since a damage of 1 per cent, was paid for an exposure 
loss on one building and contents in New York insured for $1,000,000. 

The mere consideration of the fire waste in the United States will do no 
good. It is a large country, its people have large ideas, and the fire waste 
must merely be looked upon as a part of the reckless disregard of aggregate 
results. What is the business of all is the special concern of none. The 
President and Congress have declared themselves powerless to interpose to 
arrest the wholesale destruction of property ; and the only thing accom- 
plished through the elaborate machinery of the national government has 
been the collation of foreign statistics, serving to throw into bold relief the 
extravagance of our own figures. Yet such features as the record of Vienna 
were merely a sort of nine days' wonder among the few insurance students 
who examined the report. For the time, they saw the American record in 
its true light and then straight-way forgot the matter. The indifference 
is general and not surprising when the members of our own profession are 
so inactive. The uninitiated might be startled at the assertion that two 
fires occur every week in this country with an average loss of $400,000 each, 
half of them in mercantile risks. We apprehend, but cannot comprehend ; 
the figures and long columns of statistics leave little impression on the 
mind. For example, a table of American fires in 1894 exceeding $200,000 
each, appeared last month in a leading insurance journal, in which there 
was an error of $10,000,000 in the footings, but no one seems to have paid 
any attention to it. To the American people, $10,000,000 appears to be a 
small matter. It is sufficient for them that most of the loss is insured ; and 
even fir,e chiefs, with few exceptions, subtract losses paid from insurance 
involved and treat the remainder as so much salvage, as though we should 
feel thankful that our losses are not all total. Absolute safety for our pol- 
icyholders in mercantile centers requires a combined surplus of insurance" 
assets over capital and liabilities in the United States of at least $100,000,- 
000, and as there is only about half that amount now available, the public 
should be informed, even though not convinced, of the necessity for a 
moderate annual excess of receipts over expenditures in the underwriting 

Wider circulation should have been given to the admirable letter from 
Mr. E. G. Richards of the National of Hartford, upon the "conflagration 
hazard of large cities." It is based upon the sworn reports to the 
Massachusetts Insurance Commissioner, showing that in the congested dis- 
trict or business center of Boston, the ratio of loss to premiums in ten 
years had been, say 91 per cent., and of loss to amount at risk 54 per cent. 
In other words, it would have required an average rate of at least 1 per 
cent, per annum in the district to be remunerative, while the average rate 
actually obtained was 60 cents per annum. Mr. Richards remarked that 
"nothing will check and keep within safe limits the hazards which have 
produced these unfavorable results but the strong arm of a well enforced 


and effective building law, re-enforced by an equally good system of sched- 
ule rating." 

It is remarkable how much information, such as it is, we secure through 
statutory requirements in the United States. It would be interesting to 
know how many extra clerks are needed in our home offices to record and 
tabulate the mass of figures annually demanded of us. To tell the truth. 
we give the state far more than we should feel inclined to prepare for our- 

We know in a general way that certain fields have left us losers, and we 
think some towns and certain classes of business have done so. Neverthe- 
less, that is a good story of the member of the Pacific Insurance Union who 
complained of the bad record of a Pacific towm from general observation and 
who, when the general manager called for actual figures from all mem- 
bers, found that his own office had received a profit from the very place 
complained of. If the companies would in a reasonable way, undertake the 
collation of general statistics, the result would benefit the business and 
the community alike. The National Board committee wisely confined its 
proposed classification to eight general classes of risks. If the Board of 
Underwriters of the Pacific would authorize the classification of Coast 
premiums in such manner, keeping separate the business of Book i, 2. 3 and 
4 towns and outlying districts, and if the members could then be induced 
to report the gross losses incurred monthly, the result would be more 
valuable than is generally supposed. This would neither affect the value 
nor reveal the results of private classifications which deal with net lines 
and losses, segregated into many more classes; but it might teach our sur- 
veyors, and the rest of us as well, some much needed lessons and arrest the 
frequent temptation to cut off five or ten cents from ratings little able to 
stand the reduction. It would be optional to use the new National Board 
headings in reporting losses, which Mr. Hayden calls "classification run 
wild," seeing that the highest numbered class is 1687. 

Critics are fond of urging that rates need revision on the Coast, which 
is true enough; but not one of them would feel competent or willing to lead 
the way, upon individual judgment, unless perchance there are among us 
some of whom it may be said that they " step where angels fear to tread." 
The ratio of loss to premiums in the Pacific field outside of California dur- 
ing the last three years has been 52 per cent., which leaves little margin 
after the addition of the heavy expense ratio required. In 1894 the ratio 
was 58 per cent. It is the old story of conflagration losses, or rather large 
single fires as compared with the size of the field. We never have charged 
properly for the hazard and probably never will until men of intelligence 
and experience take the matter in hand with the determination to solve 
the problem. It takes time but so does everything which is worth doing. 

The most vigorous writer upon insurance matters in this country has re- 
cently been criticizing the charge for "previous fire record" in the Uni- 
versal Mercantile Schedule. "This," he remarks, "seems to us to have no 
place in schedule rating, at least until the schedule itself has been fully 
tried. When you have got your charge for environment, construction, 
occupancy, exposure, ignitibility and combustibility, water supply, fire de- 


partment, etc., you have gone about as far as schedule rating will take you 
safely. Schedule rating has nothing to do with the existing conditions, 
except as they are found in existing deficiencies. It assumes a knowledge 
of the perils that environ the fire underwriter and to schedule them and 
fix their value as factors in making rates. The fire record of the past five 
years is the result of conditions then existing, probably still existing, and if 
the schedule does not reach these, schedule rating is a failure." Exactly 
so, and the schedule does reach them. The trouble is that an inflexible 
schedule made in the ordinary way would reach them too much to suit the 
public, and if they are to be tempted with what we have to sell, it must be 
made attractive. 

Experienced underwriters know that mercantile rates upon the bases at 
present in use are inadequate, and leave heavier loss in most cities than 
the $5 per $1,000 at risk prescribed by the Universal Mercantile Schedule. 
But there are exceptions, dear to the heart of every troubled manager, and 
he knows that he must either provide low rates or expend more to secure 
business in the excepted cities. So the Schedule fixes the standard for the 
good city and adds for the record of the bad. Do you suppose it possible to 
so analyze the differences between two cities of 50,000 population from the 
standpoint of physical hazard, that the resulting key and schedule rates 
shall be graded according to actual experience? It is unlikely. No rating 
committee would have presumed to change the key rate of Milwaukee be- 
cause of the existence of the Bub & Kipp building before 1893, nor the rate 
^of other cities for similar untried features. It does not seem probable that 
the mercantile district of Syracuse is exceptional (save that the buildings 
affected by large losses are above the average height in cities of moderate 
size), and the reports of fires there in recent years do not lead to the con- 
clusion that moral hazard, the intangible bug-bear, was to blame. But in- 
surance companies have paid the losses and have every right to recoup 
themselves within reasonable limits. 

It is not sufficient for the underwriter that the water supply of a city 
passes through mains of a standard size, that the fire department has the 
requisite number of engines and men, that the streets are of a standard 
width, and the buildings of ordinary construction. The specific items of 
the schedule cannot be altered for a particular city if the water pressure is 
weak when needed, or the fire department slow or bungling, or if a fire 
affecting a stock peculiarly susceptible to damage is extinguished with a 
volume of water from hose when a chemical stream would have answered 
the purpose, or if a particular building is so recklessly constructed that the 
frequent comment is made: "Upon the arrival of the department, the 
w T hole building was a mass of flames and threatened the surrounding prop- 
erty," or if mercantile houses are careless about the condition of their 
premises. It is the result, not the cause, with which the underwriters 
l\ave first to do. Our head offices do not want explanations or excuses for 
losses; they want profits. With all due respect to the opinion quoted, the 
item "previous fire record" is an object lesson. In every city where 20 per 
cent, is added to the key rate because of an average loss of $6 instead of $5 
per $1,000 at risk, there will be taught the daily lesson that the city is out- 


wardly the same in character as others where the original key rate is the 
same, but that for some reason the same conditions produce worse results. 
There is nothing to prevent communities under such circumstances from 
employing fire marshals, keeping a close watch upon the water pressure, 
etc., or even from adopting the recommendation of fire chiefs in Omaha and 
elsewhere, who think their cities can properly, and should, maintain sal- 
vage corps or fire patrols. By all means let it be understood that any 
city is entitled to insurance at the list price, provided existing conditions 
produce the expected results, but not otherwise. 

Its title limits this paper to American cities, but the temptation cannot 
be resisted to draw a hasty comparison with better standards. It is gen- 
erally understood that English rates are 75 per cent, and German rates 
about 90 per cent, below the American, but it is not so well known that 
their risks are three hundred per cent, better at a low estimate. A few 
blocks from the cities of London or Berlin transported to New York or 
Chicago with our appliances for fire protection, would be eagerly sought for 
at European rates. The London building law until 1890 forbade the erection 
of any building having a capacity exceeding 216,000 cubic feet (equivalent 
to 60x60x60) above the footings of the walls, unless permitted by a special 
act of parliament ; and only three exceptions were then known among the 
550,000 or 600,000 brick and stone buildings in London. The law has been 
modified to allow 450,000 cubic feet (77x77x77) between walls, by special 
permission, where a building is used exclusively for one occupancy of non- 
inflammable nature, and only fifteen such warehouses have been erected. 
The Pacific Coast easily breaks this record. The following are examples of 
mercantile brick buildings in our cities exceeding the London limit, few of 
which are confined to a single occupancy. As it is impracticable to keep 
dimensions in mind without confusion, simple boxes of straw-board are sub- 
mitted, representing the cubic capacity of each building, upon the scale of 
ten feet to one inch, each city being distinguished by a particular color : 

San Francisco. Dimensions. Cubic Feet. . Bldg. Cord's. 

Murphy, Grant & Co 75x137x52 534,000 .65 .75 

Parrott building 125x160x60 1,200,000 1.70 1.90 

Flood building 150x200x85 2,550,000 1.35 1.45 


Sherlock building 100x100x82 820,000 2.30 2.60 

Dekum building 100x100x116 1,160,000 1.40 1.60 

Los Angeles. 

Stowell block 60x155x67 623.100 1.00 1.20 

Bryson block 120x103x104 1,285,440 1.55 1.55 

Stimson building 90x150x110 1,485,000 90 1.10 


McDougall & South wick . . . . 115x80x66 598,000 1.45 1.65 

Rialto building 240x110x40 1,056,000 1.25 2.00 

These illustrations only include buildings which are without brick parti- 
tions rising through the roof. Even in Eastern cities it is not always easy 


















■ - 








' .. ..' 




to equal such a showing. In the special report upon foreign fire service by 
Commissioner John R. Murphy of Boston, diagrams of London buildings are 
given in comparison with American. Some of the plates will be produced 
in our annual proceedings with the kind permission of the Boston Board. 
The New York building of largest dimensions shown has 22,800 square feet 
of floor area, say 200x114, and probably contains 1,150,000 cubic feet. The 
largest Boston building shown has a floor area of 52,000 square feet (un- 
broken by partitions), and probably has a capacity of over 3,000,000 cubic 
feet. It is doubtful whether the combined force of the 43 engine companies 
in Boston could handle a fire in such a building if it gained headway. Con- 
trast the figures quoted with two or three London examples. Several 
firms there extend their business, cut up into numerous branches, over a 
large area, but use compartments which are as good as separate buildings. 
William Whitely's stores are divided into two distinct parts by Douglas 
place, under which sub- ways are run; the floor area of one part being 70,400 
square feet cut up into 109 buildings, and of the other 72,000 square feet 
with 40 sub-divisions. None of these buildings is over four stories high. 
Another firm occupies 28 buildings averaging 1,243 square feet in floor area, 
say 20x62 feet. The comparative ease with which fires can be handled in 
such risks has naturally deterred the London authorities from adopting 
methods and equipments which we consider indispensable. Mr. Murphy 
criticized the fire brigades in some particulars in his report, which will 
well repay careful reading, but was forced to admit that there did not 
appear to be the same necessity for the perfect organization, drill and 
familiarity with their respective fire districts which are required in 
America. His Paris experience gives the best possible proof of this. "I 
was present," Mr. Murphy remarks, "at a small fire which took place in 
the basement of a hotel, with small stores in the lower story, and in the 
stories above were suites for tenants. It was curious to see the people 
looking down from the windows above at the firemen at work in the base- 
ment apparently not in the least disturbed. They could do it with im- 
punity for the buildings are not built to burn." Imagine the inmates of an 
American hotel, in event of a fire in the basement, stopping to watch the 
firemen from a third story window, or indeed pausing for anything but 
sufficient clothing to reach the street with due regard for appearance. 

It may be difficult to prove that our large brick buildings, undivided by 
fire proof walls and nearly all containing wooden floors and stairways, are 
responsible for our heaviest losses. But the tables on which this paper is 
based support such a theory. Chicago is the only city reporting the size of 
buildings affected by large losses. In the five years, 1889-93, inclusive, 
forty out of the sixty-seven fires involving over thirty thousand dollars 
each, destroyed or damaged brick buildings from four to ten stories in 
height, of which only one was within the limited size prescribed 03^ the 
London building law. Our English friends may well consider this an evi- 
dence of the necessity for their requirement. 

The fact that the sixty-four sheets of fire loss statistics forming the 
foundation for this paper were only completed within a week, will account 
for the disjointed character of the thoughts now presented. Much time 


could profitably be devoted to the experience of different American cities 
and the reasons why so many large fires impair what would otherwise be a 
remarkable record of fire fighting. The belief remains that cheap, hasty 
and careless construction, together with the almost universal use of wood 
in the internal finish of so-called brick buildings, are the chief causes for 
the present deplorable fire w r aste. We are not in so great need of intricate 
building regulations regarding cornices, beams, etc., as of three funda- 
mental rules to be rigidly observed. First, that the cubic contents of brick 
buildings for mercantile or manufacturing uses shall not exceed say 360,- 
000 cubic feet between fire walls; secondly, that floors and stairways -shall 
be constructed to prevent the rapid spread of fire from one story to an- 
other ; and third, that in high buildings intended to exceed the limit of 
360,000 cubic feet, floors absolutely fire proof shall be provided for a suf- 
ficient number of stories to make certain that the combined capacity be- 
tween them shall not exceed the suggested limit. Under such a proposi- 
tion, a building of nine stories having a floor area of 10,000 square feet 
without division walls should be in three compartments, the floor of the 
fourth and seventh stories being so constructed that there should be no 
reasonable possibility of fires spreading above or below them. Such re- 
forms should save from $25,000,000 to $50,000,000 per annum. 

Perhaps the members thought this paper would be replete with details 
of fires of special magnitude ; but experience has so often shown that these 
details are difficult to read and wearisome to follow, that accounts of such 
fires have been omitted. 

As far as it could be done, fires involving more than $50,000 loss have 
been considered separately ; and 261 of these occurred outside of New York 
and Boston, consuming property to the extent of over $40,000,000. It is 
needless to remind you that if these fires, numbering less than one-third of 
one per cent, of the 90,574 fires tabulated, could have been confined to the 
premises on which they originated, an enormous saving could have been 
made, as the entire loss represented was only $120,000,000. In brief, it is 
evident that thousands of fires occur in this country, as in England and on 
the continent, which are of little moment in the aggregate ; but that the 
facility with which fires spread in mercantile districts causes a few fires to 
destroy enormous values, in spite of the splendid discipline and effective 
appliances of our fire service, while the slow-going firemen and still slower 
apparatus on the other side of the water maintain a better record with 
comparative ease. It seems impracticable to bring about a change in this 
country without special State laws, but we shall be doing less than our 
duty if we omit to agitate the subject upon every possible occasion of this 

(Applause. ) 

The President — Gentlemen, the subject discussed by Mr. Folger 
is one of vast importance, and has been treated ably. Mr. Folger 
has a happy faculty of illustrating his papers, as you will observe. 
Our Association has been called a kindergarten, and following out 


that idea we have object lessons furnished by Mr. Folger, which I 
have no doubt will be particularly interesting to you. The pub- 
lished report, which will give the statistics that he has referred to, 
will also doubtless be a very valuable addition to the records of this 
Association. I would be glad to hear from the members if they 
have any remarks to make on this subject. 

I wish to say that during a conversation with Mr. Purcell, Assist- 
ant United States Manager of the Sun Fire Office of London, a day 
or two ago, he expressed himself as very much surprised at the high 
frame hotel buildings we have in this city, and remarked in passing, 
that in most of them he should decline to sleep on the top floor if 
the property was given him. He was surprised that they were able 
to get any tenants or occupants for these high frame hotel buildings. 
In New York in the brick tenements persons seeking quarters would 
first ask to see the air shaft, and dumb waiter, and elevator, to 
know whether it was fire proof and secure, before they would take 
the upper floors, but here, he was surprised to find, we have little 
difficulty in renting the upper floors of these five to eight story 
frame structures. He thought it was as much as a man's life was 
worth to sleep in one of them over night. 

Mr. Fo]ger has explained that in England slower methods and 
poorer apparatus are more successful in resisting fire losses than 
ours, because of the construction of buildings. 

Mr. Osborn — I would like to ask Mr. Folger if the English law, 
prohibiting the excess cubic feet, makes any distinction as to the 
size of the building, that is, the height of the building; whether a 
one story building 150 feet long, with excess cubic feet, would be per- 
mitted, as against one that might be five, six or seven stories high? 

Mr. Folger — The building law of London makes no restrictions 
as to the manner in which the cubic contents shall be estimated. If 
a building be 60 by 60 by 60, as the illustration here shown, the re- 
sult would be the same, as if 60 by 100 and very much lower. 
They simply take the total cubic contents, and require that it shall 
not exceed the aggregate prescribed. 

Moreover, if the London building to be erected shall be 60 by 60 
at the base, and the owner desires to have it exceed 60 feet in 


height, he is not prohibited from doing so, but at a distance no 
greater than 60 feet from the footings of the walls he must construct 
a floor which is absolutely fire proof, that the result will be the same 
as though the two separate buildings were placed one on top of the 
other. Moreover, the illustrations here are even less favorable to us 
tli an you would suppose, for the London building is estimated, as I 
have said, from the footings of the walls; that is. from the two or 
three courses of brick before the wall itself begins, so that where we 
use fourteen feet cellars, they would have to be considered in esti- 
mating the cubic contents, and would reduce the height. Whereas, 
all these Pacific Coast illustrations are taken from the street level. 

The President — If there are no other remarks on this subject, 
gentlemen, our next paper will be, ' ; Some Aspects of the Theory of 
Lines,*' by F. G. Argall. 

Mr. Argall — Mr. President and Gentlemen: (Reading:) 


A few months ago the President of the Actuarial Society took an occasion 
to express officially his opinion that, while papers of a temporary or local 
character are often readable and interesting, the formal sessions of a pro- 
fessional body should be mainly devoted to the consideration of questions of 
a permanent value. That his feeling on the point is fully in accord with the 
views of this Association is abundantly proved by the tone of our proceed- 
ings — past and present ; and I sincerely wish I could lay before you to-day 
something worthy of your discussion or remembrance. I hardly hope for 
this, but shall be well satisfied if my remarks should suggest or lead to a 
fuller consideration of any one of the less known principles of our business. 

In the theory of lines w T e have a subject which — while it is open in its 
various aspects to an endless amount of speculative and interesting treat- 
ment — possesses its main value for the present purpose in that it bears 
practically on our every-day work, and is directly connected with our primary 
function in life, that of earning a safe and regular profit for the stockholders 
we represent. The power to fix and preserve a true relative proportion in 
our underwriting liabilities is an absolute condition of anything like the 
fullest measure of success ; and the failure to sufficiently appreciate this 
fact has, I am convinced, ruined more companies than all other causes put 
together. Inadequate rates and disproportionate lines are the Scylla and 
Charybdis of our business — with this further similarity to the classic fable, 
that inadequate rates form a bold, threatening promontory, which, if not 
avoided, must certainly be seen, by even the most careless mariner, while 
disproportion in lines becomes a deep, treacherous whirlpool into which our 

.a t^ o t 

v\ o t •& \^ "^ 




v <? 





) I ^>^ 


E U S T O N ff O A D . 





'"""•""ft s o sso 

tjnP HOBO S EL OjJStj.R E £t" 

_ |i ; // ! / 6LMS 'fioor 2".° \ If j-__o j_£< 

h .-li re- ~*- J , J .3'"--y^i^r^Q<»A»y J | I _^_ ^- - r -l ^' V -»- ^ -~- A_ ^- -j^_ 1 :;, 

1 — "— -*- — I ' I NJj 

Show noons § Show Roavs fartf I r "£ L,aft*frv > Sh<m,x,h>. 

rj i )u 1) ^^ y u 




****** ******* 7^^ ^ ^^^ r r^^^TLTJTi^c^ 


3 n .° 

'■' "-^s^LONDONi — 

Plate No. 5. 


ship may be drawn insensibly, but irresistibly, and with a smooth relent- 
lessness which forms its worst danger. 

Admitting even the partial truth of my contention, it is worth noting 
how completely the science of lines is ignored by what may be 
termed our educational literature. It does not seem to have been much 
discussed in even such representative publications as the Monitor or 
Coast Review, unless, perhaps, in some of the older numbers. There is 
nothing bearing on it in either the standard text books, from Emerigon 
down to Clements, or in the smaller handbooks of general practice. All of 
these leave the matter severely alone, apparently as being outside their 
province — which, perhaps, it is. Most remarkable of all, there is, if we may 
trust the indexes, nothing whatever on the subject in the proceedings of 
our own Association for the sixteen or seventeen years of its existence, 
with the single exception of a paper contributed by my good friend, Mr. 
Andre; and this, though entitled "Rates and Lines," is rather a plea for 
discrimination in rates than a discussion on lines. The only printed matter 
I can find of direct assistance in the present connection is a brief but very 
thoughtful and able article on Average, written some time since by Mr. 
Walter S. Nichols, to whom I take this opportunity of making my cordial 
acknowledgments. The point, however, I desire to make is that there are 
at present no accepted rules or established principles by which the net 
holdings of a company may be examined ; and that, as regards this most 
vital question, the responsible underwriter of a company must -determine 
his own policy and work out his own salvation. 

That fire insurance is a business of the greatest complexity no one in 
this room need be told, little as the fact is realized or recognized by the 
outside world. It is a plain presentation of a simple truth to say that the 
successful management of a large company requires qualities and abilities 
of an order and range which would ensure eminence and distinction in 
almost any sphere of life. In no department of an underwriter's duties, 
however, is there a better opening for the profitable exercise of judgment 
than in the handling of lines. It may, possibly, be claimed that the correct- 
ness of rates is of the more primary importance. It is certainly true that 
no company can hope to prosper unless it receives on its aggregate trans- 
actions a premium revenue proportionate to the liabilities it incurs. But 
rates, as a general thing, may safely be left to look after themselves. They 
are governed, to a certain extent, by the laws of supply and demand. It is 
to the interest of every one in the business that they be maintained. They 
are always, as it were, in evidence ; and errors of calculation in them (as a 
whole) are usually more or less obvious, and, at the end of a year, or succes- 
sion of years, can be met with comparative ease by that convenient if 
illogical expedient, a general increase over the whole of an unprofitable dis- 
trict. Moreover, in fixing our rates we enjoy the cardinal advantage of a 
century of combined experience, compressed and crystallized into the statis- 
tics and schedules we now have on file either in our own offices or with the 
various organizations to whom we choose to delegate so large a proportion 
of our functions. It is therefore possible to debate the question of rates 
with something definite to work from, and, as Mr. Moore has so ably 


demonstrated, with something* approaching an accurate and precise method 
of application. 

In considering our present subject, however, where are we to begin? or 
where shall we find a foundation on which to build i It cannot be considered 
alone. It is inseparably bound up not only with such familiar and practical 
matters as risk and rate, or the classification of risks, but with such wider 
questions as the relations between capital and reserve or capital and income. 
S >me of the problems involved are most abstruse and complicated; and in 
the whole range of our professional work I suppose there is literally nothing 
on which so wide a diversity of opinions exists, and which it is so difficult 
to bring under the ordinary rules of investigation. We have here to-day 
representatives of offices which stake their faith on "large" lines, and do not 
hesitate to freely advertise the fact; while others of us have been educated 
to a firm belief in "small" lines as our guiding principle. When experts dif- 
fer to such an extent on so material a matter — and, be it specially noted, all 
make money— who shall presume to lay down the law with any confidence? 
One is almost led to the conclusion that, within certain limits, either 
system will bring out pretty much the same results. 

It is a threadbare truism to say that the insurance business is built up 
on a foundation of average. But it is a good deal easier to make this gen- 
eral statement than to follow in detail the obscure workings of the laws of 
average, as they actually affect our transactions. To begin with, the laws 
of average- themselves are far from consistent in their results, unless they 
have a much larger field of operation than the insurance business usually 
permits. Furthermore, our basal facts are not (and, from the very nature 
of things, never can be), either fixed or thoroughly reliable. It is necessary, 
therefore, in determining our policy on any given matter — whether it be 
rate or line, or the writing of a particular class of hazard — to make provision, 
firstly for that inherent chance of fluctuation from the normal which exists 
in every abstract proposition dealing with numerical probabilities, and 
secondly, for the chance of error in our estimation of the real character of 
the proposition. To illustrate : We will assume that the experience of writ- 
ing, say, 20,000 risks on frame detached dwellings of a certain class justifies 
us in the expectation that out of a further two thousand dwellings, appar- 
ently similar in character, such a number will burn in a year as would equal 
ten total losses. On this basis, and allowing 40 per cent, for k - expenses" 
and 10 per cent, for "profit," we should rate such dwellings at 1 per cent., 
and (according to average) the underwriting account for so carrying 2,000 
such risks at £2,000 each, would stand as follows : 


To premiums received, 2,000 risks of $2,000 each at 1 per cent. . £40.000 


By losses paid (equal to ten total losses) £20.000 

" expenses (40 per cent.) 16.000 

Balance, being our stipulated profit of 10 per cent I 4,000 


This is all clear sailing, so far as it goes. But we are writing a small 
number of risks on the strength of an experience with a much larger num- 
ber; and the 1 percent, rate is fixed on the larger experience. A mathema- 
tician will tell you that the risk of fluctuation from a given average is as 
the square roots of the numbers. The square root of 2,000 would be 
about 44, but the square root of 20,000 would be about 141, or, say, three 
times as much. If it be assumed as a standard that the 1 per cent, rate, 
based on the twenty thousand transactions, included the reasonable allow- 
ance of 10 per cent, for the risk of fluctuation from the normal average, it 
would be necessary to make the allowance about 30 per cent, (three times 
as much) to secure a warrantable degree of safety in writing only two 
thousand transactions. In other words, you would have to add nearly 20 per 
cent, to the rate, and make it about 1.20 per cent, instead of 1 per cent., in 
order to be measurably safe. If, however, we were to write an additional 
20,000 dwellings, the 1 per cent, rate, based on a similar and fairly wide 
previous experience, would be very much safer. 

It may be noted that, in making this little calculation, we are working 
on an obvious principle which can be expressed in the rule that — 

"The larger the number of (equal) transactions, the greater 
is the chance of approximation to the true average. " 

It should not be forgotten, however, that before we could work out our 
conclusion we had to take something for granted, just as every syllogism in 
logic must start with and depend on certain premises. 

The foregoing is an example of the working of what may be called the 
purely mathematical odds in the transaction, regarding it as a simple 
"gamble." The other chance which we have to take into account is (as 
already indicated) the possibility of error in our classification of the respect- 
ive risks. In other words, we must provide by a further loading of rate for 
the possibility that the two thousand risks, or a preponderating proportion 
of them, are not in reality just what the previous 20,000 were. This con- 
tingency is not so close as the other to the matter in hand, and need not be 
illustrated so fully ; but it is clear that it is a real danger, and it is also 
clear that (other things equal) it is proportionately lessened by every suc- 
cessive increase in the number, or distribution, of transactions. It con- 
sequently comes equally under the operation of the rule quoted above, the 
working of which I have set forth at some length as we shall presently re- 
quire a recognition of it. 

It may be well to say that throughout this paper I purposely omit all 
consideration of reinsurance, which does not touch the main issue ; that I 
figure, for the sake of simplicity, on total losses only; and that, as the basis 
for profit, expenses and losses, I take arbitrary percentages, such as are 
easily handled, without reference to our real experience. Furthermore 
that, dealing with theories, I look on the whole matter from a home office 
standpoint (which may or may not be necessarily distinct from that of a 
branch office or a general agency), and that I do not take into account the 
compound question of conflagration or even exposure hazard, my object 


being simply the establishment of the elementary principles of the line 

A few moments ago I assumed that our primary function in life is to 
make a regular profit on our capital, which is obviously entrusted to us for 
that special purpose. We are, however, responsible to our stockholders, in 
a co-equal degree, for the preservation of that capital, since it is placed at 
our disposal purely as a reserve force, and with no intention that it shall 
ever be drawn upon for the payment of losses or other liabilities. The first 
named duty carries with it the obligation to incur a certain amount of risk 
(for without risk there can be no premium;, while the second carries the 
obligation of keeping that risk within the bounds of safety. It is clear that 
these two obligations are of entirely diverse nature, and are reciprocally 
in conflict. It is also clear that the proper adjustment of them cannot be 
reached without a special consideration of the amount of risk incurred — that 
is. of what in our technical parlance is the line, or limit. 

It seems pertinent to consider here for a moment the meaning of the word 
•* safet3V as it has just been used. How many companies are really " safe '." 
That is to say, how many companies could pay their obligations and keep 
their capital intact, were there to occur simultaneously or in rapid succession 
two or three, or more, of the monstei conflagrations which are always being 
predicted \ Boston burned within a few months after Chicago, and we know 
how many companies closed their doors from the effects of those memorable 
catastrophes. Have the conditions changed \ Do the fire departments even 
claim the ability to control fires in the eight and ten story structures which 
are now scattered, with a compound increase of danger, through all our 
cities? The aggregate cash capital of all the insurance companies transact- 
ing business in the State of New York amounts to less than £100.000.000. 
There are several cities in the country where the burning of comparatively 
limited areas would cost the companies more than this sum. And there can 
burn at any time in the city of New York a district less than a mile square 
which contains property valued at more than three hundred million dollars. 
Even allowing for surplus funds and reserves, such a fire as this would cer- 
tainly bankrupt beyond hope many companies Avhich are to-day regarded as 
altogether beyond the reach of disaster. Are we to assume that it is in 
conflagrations alone that history will fail to repeat itself' I ask these ques- 
tions not because they contain any element of novelty, but because I want 
to emphasize my point. Answering them in the only way possible, it seems 
indisputable, that, while some companies are undoubtedly ••safer" than 
others, there is in practice rio standard by which their true strength can 
be tested, and that for an ordinary fire insurance company, doing a general 
business, • 'safety" is a purely relative term. 

At the same time small or moderate lines are universally looked upon by 
experts in the business as an element of safety — though sometimes, perhaps. 
in a vague and imperfectly understood way : and expert opinion should 
always command respect and must always carry due weight. This principle 
is also directly recognized by the laws of some States — California and Idaho, 
for instance, in our own field — when they provide that no company shall 
hold on any single risk a sum exceeding one-tenth of its paid up capital. 


The principle is also recognized, inferentially, by other States and Terri- 
tories — Montana, Wyoming and New Mexico, for instance — when they pro- 
vide that the annual statement of a company shall contain an item showing 
the largest amount insured in any one risk. The State legislatures, how- 
ever, have no concern for the safety or prosperity of an insurance company, 
except so far as regards the protection of policyholders, and they therefore 
fix a maximum much exceeding what would be authorized by iany prudent 
underwriter, who has also to look to the protection of his stockholders. It 
is, by the way, not at all clear what the law means by a "single risk," as 
the limits of such can only be fixed by the possible limits of a single fire — 
in many cases an altogether unknown quantity ; but this question is out- 
side our present inquiry, and should be considered together with the con- 
flagration hazard — which, as Rudyard Kipling would say, is "another 

As to the theory of the line itself, some underwriters seem to think 
that the amount should depend upon or have some connection with the 
amount of capital or reserve — in other words, that a company having a large 
capital or reserves can write larger lines than a company with smaller re- 
sources. This is the view evidently taken by the legislatures. But I con- 
fess I am unable to see any connection between lines and capital, unless, in- 
directly, through the fact that a company with large capital or reserves usu- 
ally (though by no means invariably), does a proportionately large business. 
As already brought out, capital is not intended for the payment of losses. 
To my mind lines must be based on one thing, and one thing only, viz : prem- 
ium revenue; and if we may take this for granted, we shall have gained the 
first step in our investigation. But there is, after all, only a portion of 
premium income which is intended for the payment of average losses ; and 
there is only a still smaller portion (the expected profit) which is available 
for the protection of accidents or fluctuations, beyond the average. It 
would seem, therefore, that lines must be fixed with some reference to the 
expected profit. The 2,000 dwellings above referred to would hardly be 
enough in actual practice to obtain a fair average ; but we have the figures 
cut and dried, and will take them as an example. At the normal rate of 
1 per cent, (which is all we should probably get, in view of the competition 
of other companies), the expected profit is $4,000 ; and the lines, as we know, 
were taken at $2,000 all round. On this basis it would take the equivalent 
of two extra total losses, or four extra 50 per cent, losses, or eight extra 
25 per cent, losses (a comparatively large proportion), to sweep away the 
whole of the profit. It would not, however, be prudent to raise the limit on 
any one risk, or a few of the risks only, to say, $4,000, as a $4,000 risk might 
be the extra one to burn, and if so, would by itself absorb all our expected 
profit. The small additional premium gained by a few $4,000 risks would 
not be sufficient to carry the accompanying chance of heavier loss, although 
that chance is of course only a remote one. 

On the other hand, if, instead of 2,000 dwellings at $2,000 each, we were 
writing 4,000 dwellings at $1,000 each, we should evidently be in a still 
better position, as by the increase in the number of transactions one of the 
dangers— that of fluctuation— has been reduced, while both our premium in- 


come and our expected profit remain the same. Personally, I think that 
fifty, or even twenty-five, percent, of the expected profit is too much to 
risk on any one fire, and that fifteen or twenty per cent, should be about 
the maximum, on which basis a company doing an annual business of, say, 
$100,000, with expected profit of 10 per cent., or $10,000, would limit its 
highest lines, to say, $2,500. Following out this line of argument, Ave may 
reasonably assume that (with a proper distribution of risks) the higher the 
expectation of profit, the larger are the lines which may be written without a 
sacrifice of safety, that is, without risking the loss of capital. Other things 
equal, an aggressive company, which contemplates a rapid and sustained in- 
crease of premium income, can probably afford to write larger lines than a 
more conservative and slowly moving company; and an interesting feature 
in the evolution of a "small" company into a "large" one is made up of the 
successive changes and modifications in its scale of lines, which are not only 
allowed, but almost demanded by the evolutionary process. 

As a matter of fact, there is no unanimity of practice whatever on this 
question of the maximum line, and, as we all know, the policy of different 
companies varies greatly, even where their financial standing and premium 
income closely correspond. It seems to be purely a matter of individual 
judgment, analogous to the personal responsibility of a merchant to avoid 
overtrading; and the essential conditions which govern the subject appear 
to be still awaiting their thorough elucidation. 

From the midst of all this uncertainty, however, one main principle 
always seems to me to stand out clearly and distinctly. It is obviously nec- 
essary to determine some maximum line which shall set the limit for our 
very largest transaction; and, in my judgment, every risk on our hooks, iritli- 
out exception, should have a direct, distinct and individual reference to that max- 

It seems proper that the amount of the maximum line should be fixed in 
the board room of a company, rather than in the outside office, being a matter 
akin to other questions of financial policy, such, for instance, as the disposi- 
tion and apportionment of profits. And it is tolerably evident that the max- 
imum line would in effect be represented by the highest amount which the 
company would run the chance of losing on a single risk of the class least 
likely to burn — that is, of the class on which in theory it would accept the 
lowest rate of premium. But it would be impossible for any board to fix a 
specific scale of limits which would embrace all the widely different classes 
of risk upon which we usually write ; and yet absolute consistency and con- 
gruity of lines is an essential of complete success. What we need, .there- 
fore, in practice — our standard maximum being first determined — is a means 
of regulating to that standard any and all business which comes to us. 

Every underwriting proposition which is entered on our books contains 
three intrinsic quantities, which, to borrow the symbols of algebra, we can 
define as follows : 

x. The pure hazard incurred— that is, the exact risk : transferred from 
the assured and assumed by the company ; the actual thing pur- 


if. The cost of dealing with that hazard and its results— the expense 

of handling the thing, bringing it to market and disposing of it. 
z. The profit earned or expected in the transaction; the consideration 

for which the risk is assumed. 
It is obvious that x represents a certain contingency, the value of which 
can be easily enough ascertained if we know (as we assume we- do, by our 
very quotation of a rate) the sum of the proposition as a whole. 

Going back again to our insurance on the two thousand dwellings, any 
single transaction could be defined as a hundred to one chance of a $2,000 
loss maturing within a year. For assuming this chance we receive (at the 
normal rate) a consideration of $20.00, which amount — taking the same ratio 
of expense and profit as before — would be constituted thus: 

For x, the pure hazard — the actual thing purchased $10.00 

For ?/, the expense 8.00 

For z, the profit 2.00 

It would therefore be correct to say that $10.00 represents in our opinion 
the cost price of the actual thing purchased. Putting this the other way. 
the assured in each transaction gets $10.00 worth of pure insurance. We 
are now approaching somewhat debatable ground ; but I venture the asser- 
tion that we want to get out of every separate risk we write as much profit 
as possible, consistently with safety. Many of the policies we write are for 
small amounts ; and on these we must perforce be content with a small 
profit, for there is nothing more than this in them under any circumstances. 
But when a $50,000 line on, say, a brick court house, comes our way, we 
immediately figure on the highest amount of profit we can get out of it, 
which is another way of saying the largest sum we may safely carry on it, 
as we must assume, for the sake of argument, that every premium contains 
not only the potentiality, but a certain measurable expectation of profit. 
And we figure just in the same way on a quartz mill, or a machine shop or 
a saw mill—that is, if we cultivate those risks at all. I have already 
attempted to show that consistency of lines is of the first importance ; and, 
if this be true, we do not want to carry a full line on one risk, and only half 
a line on another. No practical underwriter would argue that the line for a 
saw mill, at ten per cent, should be the same in dollars and cents as the line 
for a brick court house at 1 per cent. ; but I do think they should be rela- 
tively and proportionately the same. In other words, that the net amount 
of hazard incurred on each, and that the average amount of profit on each, 
should be exactly the same. In short, when we get adequate rates, and 
when the option is given us of carrying as much as we like, I see no reason 
why the x, y and z of all the net transactions on our books should not be 
absolute equivalents, so far as they can be made so with reference to past 

Before a man assumes to handle lines, he should, presumably, be a fair 
judge of rates. To such a judge it is an easy task to find with a moment's 
thought the exact line to carry on any risk so that it shall be the equivalent 


of any given standard. Ali that is needful is to fix upon your idea of what is 
the ''correct" rate, and then go through the little operation known in 
arithmetic as reducing your "fractions" to a common denominator, the said 
denominator being the x of your standard maximum. In the P. I. U. basis 
schedule fifty cents is the lowest rate, and, with the extreme exception of 
powder mills, 10 per cent, is the highest rate recognized. Working on the 
P. I. U. schedule, and with a "standard maximum" of $5,000, we should 
consequently write $5,000 on a brick dwelling at fifty cents, $2,500 on a brick 
court house at 1 per cent., $1,000 on a quartz mill at 2.50 per cent., $500 on a 
machine shop at 5 per cent., and $250 on a saw mill at 10 per cent. In each 
case we should receive a $25 premium, which (if the respective rates are 
right) would give us the same average of profit and of loss on a thousand 
dwellings as on a thousand saw mills, or on one dwelling as on one saw mill ; 
and, under the conditions named, I claim most emphatically that, pro- 
vided the rates are right, a net cover of $350 on the saw mill, or 
$700 on the machine shop would be an overline as much (and just as 
much) as a net cover of $7,000 on the dwelling. In figuring on our two 
thousand dwellings we came to the conclusion that we could not raise the 
limit on one risk, or on a few of the risks, without sacrificing safety ; and the 
far greater chance of a $350 saw mill loss is— under the conditions named — 
the precise equivalent of the much smaller chance of a $7,000 dwelling loss. 
At the same time we should remember that, if the premium income of the 
company or other considerations justified a maximum of $7,000 on any risk 
whatever, we could then — provided, once more, the rates are right — take 
$350 on the 10 per cent, saw mill, $700 on the 5 per cent, machine shop, and 
so on. Furthermore, it would be absolutely necessary to write such larger 
lines on each risk, if we want to get the highest safe profit on each trans- 
action or on our business as a whole. 

Now, it is the easiest thing in the world to criticise the principle of fix- 
ing lines on the basis of the rate ; but, under existing conditions, I contend 
it is the only sound and defensible method of approaching the subject- 
stipulating, however, that by "rate" is meant the " correct" rate and 
not necessarily the rate actually obtained. If we could classify our various 
risks not according to their generic occupancy, but according to their real 
intrinsic hazard, and label them, with reference thereto, by name or num- 
ber, the difficulty would be avoided; but for our immediate purpose (which 
is not that of classification), such a course is plainly impracticable. A de- 
tached dwelling, worth seventy-five cents, is not, from our present point of 
view, the same risk, or even in the same class of risk, as a dwelling in a 
range worth 6 per cent., or a dwelling in hazard of a saw mill worth 10 per 
cent. It would be absurd to so consider them, although it is true enough 
that they are both "dwellings." All we can do, therefore, is to label our 
risks by their only really salient characteristic, which is the rate. Again, 
we are compelled to assume, for the sake of argument, that current rates do 
correctly measure the hazard (to the extent, at least, of containing the ex- 
pectation of some profit) ; and, if we do not admit this in any given trans- 
action, we impale ourselves on the other horn of the dilemma, and stultify 
ourselves by the confession that we are writing the risk at a dead loss— 

^N\0 5\ 3 


o ^Aavi 









T .oH sisiq 

fl/£ ST sou /=/me 

G ffOlSE 


Plate No. 7. 


which no sane business man could afford to admit. It is obvious, of course, 
that a scientifically "correct" rate should not only cover the intrinsic fire 
hazard, with the necessary loadings for safety and profit, but should also 
recognize and allow for all such points as fire protection, excessive sus- 
ceptibility to damage, amount of insurance as compared with value of prop- 
erty, conflagration risk — in fact, everything except the moral hazard. If it 
did not do all this, it would be equally useless either for our present purpose 
or for its main purpose, that of providing for a probability of profit. 

According to statistics the average underwriting profit on the American 
business of all companies is about 4 per cent., which, however, includes 
failing and badly managed concerns. If we assume that a well managed 
company can make on its net premiums an average profit of 10 per cent., 
that figure will be the measure of the margin within which we can deviate 
without actual loss from the true rate demanded by the hazard. Witlnli 
this margin we can, if we choose, write on any risk where the rate is not 
in our judgment fully adequate, and still retain the expectation of some 
profit; and for such cases my principle works out as well in practice as for 
those cases where we assume the rate is absolutely correct. All that is 
necessary is to determine what we consider would be an adequate rate, 
and fix the line according to that rate (and, of course, with reference to our 
standard), but regardless, for the moment, of the actual rate we are get- 
ting. An illustration will perhaps better bring out my meaning: On a 
brick court house at 1 per cent, we might be willing to write $2,500, assum- 
ing 1 per cent, to be, in our judgment, the proper rate. If, however, we con- 
sidered this rate inadequate, and that the rate ought really to be 1.10 per 
cent., we should fix the line at the nearest round figure to $2, 272, say $2,300. 
To check this, we could figure that, no : 100 : : $2,500 : $2,272; and, in carry- 
ing $2,272 on a risk worth 1.10 per cent., we are (whether we get that rate or not) 
running a chance of loss which is the exact equivalent of the chance of loss 
under a $2,500 policy, on a risk worth 1.00 per cent., or a $250 policy on a risk 
worth 10 per cent. This can easily be proved by a dissection of each trans- 
action into its r, y and z components. It is clear, that, under such con- 
ditions, we should not write $2,500 on a risk worth 1.10 per cent., for that 
would be the equivalent in its chance of loss to $275 on a risk worth 10 per 
cent., or $5,500 on a risk worth fifty cents; and either of these would be an 
overline of 10 per cent, above our standard maximum. If we considered the 
court house worth as much as 1.40 per cent., we could not, with an expecta- 
tion of profit, write any amount on it at 1 per cent. ; and if we were to take 
$2,500 on it at that rate, we would both lose a few dollars out of pocket on 
the transaction, and (which is far worse) would in addition be carrying 
thereon an overline equivalent to $7,000 on a fifty cent dwelling — that is, an 
overline of 40 per cent, above our standard maximum. If my arguments 
contain any element of value, such an overline, often repeated, would mean 
a serious sacrifice of safety. 

When our worthy President recently honored me with a request for a 
paper, he was also good enough to select the subject, and this must be my 
excuse for any apparent presumption in speaking to you on a matter of which 
I know so little. As to the considerations which should guide us in fixing 


our highest Line, 1 frankly confess to a state of uncertainty: but consistency 
of lines is another and simpler affair, and I respectfully submit for your con- 
sideration the foregoing, as an attempt to throw some light on the first 
stops of an unsettled problem with which we are meeting- every day of our 

i A pplause. ) 

The President — Gentlemen. I am sure you will agree that I made 
no mistake when I requested Mr. Argall to write this paper. It is a 
very thoughtful production. In planning the programme, it oc- 
curred to me that the discussion of this subject would be of value to 
all. I. thought of those companies which evidently operate upon 
the theory of small lines, and requested a representative of that 
class to write a paper on this subject. I then endeavored to find an 
office whose theory was exactly opposite. That is to say. one which 
writes large lines on all possible occasions. I found a number of 
them, but was not fortunate enough to find any one to write. 
( Jol. Kinne, representing this class, declined. Mr. Parker of the 
Palatine, which company is a large and liberal writer, agreed to 
write a paper, but afterwards found it impossible to get the time to 
do so. and I am. therefore, unable to present that paper. Mr. Ar- 
gall took the matter up on its merits without reference to any pre- 
conceived theories. We would have been pleased to have had the 
paper promised by Mr. Medcraft, but failing in that the members 
will welcome some remarks on this subject from him. 

Mr. Medcraft — Mr. President, I apologized to you for withdraw- 
ing my paper on the same subject as that taken up by Mr. Argall 
and Mr. Parker, but after hearing Mr. Argall. I am very glad I did. 
because I think that Mr. Argall 's paper is clear, concise, and ^clean- 
cut. " and well covers the ground intended to be covered. Mr. Ar- 
gall, will. I think you will all agree, rival Mr. Folger himself in the 
interest of his papers prepared for this Association. 

It is the case that without any comparison of matter or notes one 
with the other. Mr. Argall's pp.per, and the paper I had in mind to 
present, would largely have duplicated each other, even to the use 
of algebraic formulae, to indicate the connections, and in a general 
way, I am in harmony with his views. But I dissent from the 


proposition that in the rate is to be found almost exclusively the 
reason for and the key to the graduation of lines. 

I agree with him as to the establishment of a maximum line on 
any kind of a risk. That, however, is to a great extent a financial 
proposition, to be directed by those who hold the reins of the capi- 
tal. But the plan of grading lines according to rate is fallacious: 
if you have two acceptable risks on which you are satisfied that the 
obtainable rates are respectively sufficient, you can as profitably 
write on each a ten thousand dollar line as a one thousand dollar 
line — always provided your permissive maximum, based on economic 
bases, permits it. 

A point of interest arising out of Mr. Argall's paper is in regard 
to the matter of the exposure hazard (not conflagration). For the 
purpose of argument. I will place every risk in one of two classes — 
simple and compound — the latter comprising every kind of a risk 
exposed by another. In other words, every kind of a risk except 
that of a simple occupancy, unexposed. It would thus include for 
instance, a dwelling risk exposed by another dwelling, as well as a 
dwelling exposed by a factory. Now, where is the theoretical basis 
for determining the exposure hazard? You have two dwellings each 
unexposed. These two then are available for two separate full lines 
—say 2X — also, you have two dwellings exposing each other. As a 
matter of theory at least, there is an ascertainable ratio between the 
line applicable to these latter two and the 2x line previously named. 
That is, between the double individual line in the first case, and the 
line applicable to the joint hazard in the latter case. Now, the line 
2x when applied to the latter case will naturally be affected by the 
varying conditions— physical or otherwise— existing in the two ex- 
posing risks individually considered. There may be between them 
a difference in height, or a difference in constructive merit, or a 
difference in age. Can he trace the regulating thread ? What is 
the theory by which we can positively fix the proportions, the per- 
centage of deduction from the combined individual lines, which shall 
make the proper allowance for the combination of the varying haz- 
ards. Similarly as regards a compound hazard exposed by another 
compound hazard. The line on the two is in neither case the half 


of the double individual line, pure and simple. It is not a case of 
treating the line on either, as the line applicable to the two. 

There is an exact arithmetical or geometric progression to be de- 
fined. Between simple risks the ratio of increase of hazard has as 
its foundation the principle of arithmetical .progression. Between 
compound risks the principle is one of geometric progression, and as 
a sequence to Mr. Argall's paper to-day, we will look forward to a 
discussion of this particular aspect of the matter, at our next meet- 

(Applause. ) 

The President — Would be glad to hear any other remarks on this 

Mr. Folger — I would like to say that T fail to agree with Mr. Ar- 
gall upon one point. The paper, I think, is admirable. I could not 
attempt anything of the kind. It was suggested that the maximum 
line carried by a company was, in the writer's opinion, dependent 
upon the premium income, and not upon the capital. I am in accord 
with neither proposition. The law in most of the American States 
requires that a company, to continue in business, must have its capi- 
tal unimpaired, and a reserve sufficient to reinsure its business. 
Anything above that is held as surplus. If a fire should cause a 
company to pay out at one time $100,000 and its surplus is lost, it is 
immaterial whether its capital is $4,000,000 or $400,000, the company 
will be driven out of business by such loss unless its surplus shall be 
restored to at least one dollar. Therefore it appears to me we must 
grade the lines of a company by the surplus which it possesses, from 
which it may pay exceptional losses. 

Mr. Medcraft was of the opinion that the line carried on any one 
risk need not be limited; that if the rate of one per cent., in other 
words, is advocated, there would seem to be no reason why. that 
being the proper cost price wanted, they should not carry $10,000 or 
$100,000, as well as $1,000. 

Mr. Medcraft — Subject to the permissive maximum. 

Mr. Folger — Yes, sir. There was one point that occurred to me. 
Mr. President, in listening to Mr. Medcraft 's argument, that might 


get us into difficulty, in the latter part of his remarks. If ten of the 
paper boxes on this table represented ten brick mercantile risks, on 
any one of which with ordinary exposures, in separate localities, the 
company would be willing to carry $10,000, it seems to me that when 
the risk, theoretically, of $100,000 is placed together, it would sub- 
ject the company to the exposure hazard. That we cannot, in other 
words, if you reduce the comparison to smaller figures, as safely 
carry $10,000 at one per cent., as we could $1,000. 

Mr. Argall — I would like to say, in further explanation of my 
line of thought in the matter, that I carefully avoided any reference 
whatever to compound or exposure hazard, for the reason that we 
have not yet, so far as I can see, any firm ground to work from. I 
simply touched upon the single line which we must necessarily take 
as the basis for considering the other cognate questions which 
naturally follow. 

Mr. Folger— I think. Mr. President, that the point Mr. Medcraft 
suggested to Mr. Argall, and to me as well, is very good. I was glad 
to have his suggestion that the right way out of it is to reduce some- 
what the line on two risks as compared with one. 

The President — I would like to hear from other gentlemen on this 
important subject. Mr. Lowden. 

Mr. Lowden — I have not thought it out, Mr. President. 

The President — You have the practice. Mr. Devlin. 

Mr. Devlin — I am unprepared to speak at this time, as it is a sub- 
ject requiring considerable thought. 

Mr. Doruin — I make no pretension of knowing what the applica- 
tion would be of the recent methods. But we will endeavor to hold 
our own business, and to get as much of the other fellow's as pos- 

The President — It is a very common thing for special agents to 
note on inspection slips, ' ; reduce from $2,000 to $1,500," or ''reduce 
to $500 at expiration. ,? There must be some theory for this in the 
mind of the special agent, and I would like to have explained why 
these suggestions are made on the expiration slips. 


Mr. Lowden The special agent is simply afraid the thing will 
l)ii i'ii up. and he wants to have the losses as low as possible. 

Mr. Osborn — That is so, and possibly to make his manager think 
he lias worked out the problem. 

Mr. Fogarty — I do not know, Mr. President, but what there may 
l),' more than one reason for that. Mr. Lowden suggests the appre- 
hension of the special agent for the risk proving a loss, and his laud - 
able desire to have as few of the shekels of his company disposed of 
as possible. Again, during his investigations and inspections in a 
town, the special agent passes on a large lot of desirable business, 
and in connection with it he finds a few off-colored risks which pos- 
sibly his local agent is directly or indirectly interested in. and he is 
disposed to reduce the liability on that, and frequently remarks in 
his endorsement slip, to ;i reduce at expiration. " or ; " re-insure down. " 
as the case may be, and let some other fellow participate in the pos- 
sible liability. 

The President — There is such a wide difference in the views of 
companies, or at least with a number of companies, that I have no 
doubt after Mr. ArgalPs paper is printed it will be read and ap- 
plied, or an effort will be made to get out of it some consistent 
views on this subject. Now, I am free to say that I do not believe 
many offices are consistent on the question of lines. We are actuated 
too much by our prejudices or impulses, and w^e ought to be very 
careful not to be stampeded by one or two or three bad experiences 
in succession, for our practice should be based on the results of many 
years, rather than upon the result of one year. 

Mr. Lowden — Mr. President, there is only one remark to which I 
wish to take exception, and that w T as made by my friend. Mr. Folger. 
I agree with him in a great many of his ideas regarding the business, 
but he says that the line should be governed by the surplus of the 
company, instead of, as suggested by Mr. Argall, that it should be 
by the premium income of the certain department. I would call Mr. 
Folger ? s attention to this phase of the question. We will say that 
the premium income of this whole Pacific Coast department is 
$12,000,000, and the losses are $6,000,000. which would be, say at fifty 


per cent, loss ratio, and if you are doing an average business, your 
loss ratio would be fifty per cent., or the general average for the 
whole Coast. The ideal way to reach that result would be, if one 
hundred companies are competing for the business, you should have 
one hundredth part of every risk written in this department. Con- 
sequently I think that a company's line should be governed almost 
entirely, in any of our departments, by the premium income of that 

Several voices — That is right. 

Mr. Folger — I am in accord with what Mr. Lowden has said, and 
he has presented more clearly than I have, my ideas on the subject 
as to single lines. 

The President — The common practice. I think, is to write a full 
line, and then not more than half a line on either side. Whether 
that is based upon any actual experience or not, I am unable to say. 
I presume the theory behind it is that if one risk burns the same 
fire is not likely to burn the risk on each side; hence, such a 
division will not involve you in a loss of more than two total lines. 

Mr. Argall — I have refrained in my paper from committing myself 
on the point: but must confess that if I had to argue on two proposi- 
tions— one, that lines on the Pacific Coast should be handled from 
the home office point of view; and the other, that the lines on the 
Coast should be handled from the Coast standpoint — I would cer- 
tainly take the home office side of the case. 

What 1 mean is this; If you are going to take each department 
on its own merits, where are you to draw the line? Could not our 
local agents also take, each for himself, the same ground? If we 
look to our Sacramento agent for a regular profit, year in and year 
out. should he not also have the power to fix lines suitable for his 
smaller field? We are. most of us, general agencies here, and if we 
act on the other principle it is difficult to see where to draw the dis- 

Mr. Lowden — In answer to that, I would simply call Mr. Argall's 
attention to the fact that the London companies more particularly 
base their lines on the construction of the London buildings, and 


their education has been that they can afford to carry very large 
Lines, and make money. Our experience on the Coast here is very 
different. If you follow out the recommendation of your home office 
and base your lines on the Pacific Coast department, on- the lines 
carried by your company over the world, you will have as a result a 
wry lumpy series of profit and loss. In other words, you will have 
tliis year an abnormally low loss ratio compared with the loss ratio 
of the ( 'oast. The next year you will be away out of sight; you will 
get hit on some of these large lines as you did at Portland. 
(Laughter. ) 

Mr. A r gall — Excuse me, gentlemen, for taking so much time on 
this matter, but unfortunately, I have not made my views very clear. 
If the hazard on a risk here is so much greater, then the application 
of my theory would require you to carry a proportionately smaller 
line, as the correct rate would be so much higher. 

The President — It goes without saying, that the head office de- 
sires each of its departments to pay. 

Mr. Lowden — That is right. 

The President — Theoretically, Mr. Argall is doubtless correct 
from the company's standpoint. They must regard us as we regard 
the local agent reporting to us, and therefore their chief aim is to 
get a profit out of the whole business transacted, whether it comes 
from our department or not, and in the general instructions received 
by most of the managers, I presume something like this will occur: 
That we desire you to apply these limits boldly, at the same time 
we will hold you responsible for the results in your department. 

I regret that Mr. De Veuve is not present to read this paper, 
number twelve. I am not sure whether he will be present or not at 
the afternoon session. We have left, as far as the programme is 
concerned now, nothing but numbers fourteen, fifteen and sixteen. 
That is, the reports of committees, election of officers, and the read- 
ing of the ' 'Knapsack," for this afternoon. I think it is quite pos- 
sible we may have a paper which is not on the programme, by a 
member whom you w^ill be glad to hear,, but I will not be able to an- 


bl^f© W 

S TR£.Ei T. 

Plate No. 15. 



nounce it at this time. Is there any further business at this morn- 
ing's session, Mr. Secretary? 

The Secretary — No, sir. 

The President — 1 will say again that we have quite a large quantity 
of these programmes, and would be glad to have you|take them and 
send them to your friends. I think it proper to say that the design 
on the front cover of the programme was drawn by Mr. F. B. Kellem. 
of the Royal-Norwich Union office. I think it a very creditable 

Is there any further business ? 

Mr. Lowden — I would move that a vote of thanks be tendered to 
Mr. Kellem for what he has done for the Association. 

Mr. Gibbons — Second the motion. 

The President — It is moved and seconded that the thanks of this 
Association be tendered to Mr. Kellem for design drawn for us, and 
which is used on the programmes and menus. All in favor of the 
motion will signify it by saying aye. Contrary, no. It is so ordered. 

Gentlemen, if you have not already given your names to the 
chairman of the dinner committee, there are some blanks here. I 
trust you will not neglect the matter. Mr. Spencer informed me just 
before I came to the meeting that seventy persons have signified 
their intention of attending. That will be quite a large company. 

A motion to adjourn to this afternoon will be in order. 

On motion an adjournment was taken until 2 o'clock. 



The President — Gentlemen. I was compelled, at this morning's 
session, to announce that several papers which were promised had 
not been prepared, or had not been presented. On returning to my 
office I received a letter from the stenographer of Frank D. Brown, 
of Philipsburg. the absence of whose paper caused us considerable 
disappointment, to the effect that he is in the Eastern part of Mon- 
tana: that he had prepared the paper, and the stenographer sup- 
posed it had been forwarded to us, but that it must have been over- 
looked in some way. and was locked up with Mr. Brown's papers, 
if it had not been sent by mail. 

I am very pleased to say. however, that our worthy Vice-Presi- 
dent. Mr. Driffield, whom I hope to have the pleasure of congratulat- 
ing later on — and this is not politics, either — has consented at the 
last moment to read a very short and impromptu paper for our en- 
tertainment this afternoon. 

Mr. Driffield — Mr. President and gentlemen: The failure of the 
receipt of Mr. Brown's paper has caused you all disappointment. I 
am afraid that the paper that I am about to read will also cause you 
disappointment, as I must say it has been drawn up at the very last 
moment, with but slight notice, and is merely a stop-gap. (Read- 


While insurance companies have, for many years, recognized the value 
of organized and united effort in matters pertaining peculiarly to their own 
business — such as the maintenance of adequate rates, the enforcement of 
beneficial rules, the regulation of compensation to agents and brokers, and 
in the establishment of various bureaus, by means of which a more accurate 
knowledge of the risk is obtained — yet it seems to me that there is actual 
need of a further combined organization of the companies on a broader basis, 
and affecting our interests in a general, rather than in a direct manner. 


The business of insurance is so closely interwoven with the entire sys- 
tem of commerce, it is so necessary a factor in the question of finance, and 
so material an element in the realm of social economy, that it is impossible 
it should not be affected by very many causes outside of its strictly own 
domain, but producing effects which are none the less felt on that account. 
I think it may be accepted as a fact that "insurance men" as a class, are 
peculiarly wrapped up in their own business, and while, no doubt, many of 
them have hobbies and fads in which they indulge in their spare moments, 
yet it is rarely that in business matters they show much interest* in any- 
thing that does not pertain to their own profession. My purpose in pre- 
senting you with these shortly expressed views is to endeavor to stimulate 
an interest among the members of our fraternity in those affairs in gen- 
eral having a relation to the interests we represent. 

When we regard the immensity of the financial interests represented 
by insurance corporations — second only in the United States, I believe, to 
those represented by the railroad companies — it must be apparent that a 
strange and unwarranted apathy is displayed by us in the conservation of 
those interests by a more active participation in the affairs of State. 

A good and efficient government — federal, State and municipal— the 
enactment of wise and beneficial laws and regulations — and the election 
and appointment of competent and honest officials, are matters in which 
we, by reason of the vast interests committed to our care, are profoundly 
concerned. Yet do w T e hear of any organized efforts on our part to bring 
about the desired results? In our individual capacity we presumably exer- 
cise the best judgment we possess towards the accomplishment of the 
sought-for ends, but our efforts are to a large extent valueless by reason 
of their want of unity. 

As a body, we possess no power in political matters, we command but 
little attention or respect from the public, neither do we inspire with fear 
those who make it their business to, in their several ways, prey upon cor- 
porate interests. 

It is true, that, occasionally in legislative years, we combine together 
and appoint a committee to use legitimate efforts to protect our interests 
from pernicious legislation, but such efforts are tentative only, and cease 
upon the attainment of their immediate object. Instead of Waiting to fight 
inimical measures in the legislature, would it not be wiser for us to exert 
our united influence and power in the elections, and see to it that no pro- 
fessed antagonist is placed in a position to, later, do us harm? 

The influence (not always beneficial, it is true) of the railroad compan- 
ies upon the politics of the country is acknowledged by all, and it is an 
accepted fact that by systematic effort and shrewd manipulation they have 
succeeded in attaining a power not far removed from that of dictatorship. 
Nothing of this autocratic nature is anticipated by the exercise of our 
combined efforts as suggested herein, but surely it should be within our 
province to endeavor to so use our influence as to preclude the possibility of 
the retention and growth of demagogy, ignorance, and knavery in matters 
politic. As a class we are much concerned in municipal matters. An in- 
telligent and fair-minded Mayor, and a body of capable and honest Super- 


visors, will Lead of necessity to the enactment of wise and prudent civic 
measures, and to the appointment of desirable city officials. Much needed 
i\d'ornis in our building ordinances and the strict enforcement thereof: in- 
creased water facilities in the rapidly growing outside districts: the es- 
tablishment of a fully-paid fire department, and the appointment of a suit- 
able Board of Fire Commissioners to intelligently supervise the composition 
and equipment thereof; the enactment and enforcement of regulations re- 
garding tbt 1 storage of explosives, etc.; the creation of the office of Fire 
Coroner— these and scores of other equally valuable objects might be se- 
cured, it' we wielded the power we would possess were we only properly 

How often has it been our experience that we were unable to obtain just 
and rat ional rulings and decisions from our judiciary? Should we make a 
combined effort to place upon our court benches only such men as we knew 
to be capable and impartial, might we not in time dispel the fear which 
now exists with us when considering the advisability of contesting a dis- 
honest or illegal claim? 

It is not necessary for me to further enumerate the instances in which 
an organized effort on our part, upon the line suggested, should bear most 
beneficial results. Needless to say they are many, and it is my opinion 
that were we to display the same interest and concern in the election and 
appointment of public officials, as we do when by their acts our interests 
are jeopardized, we should find it greatly to our advantage. 

The recent meeting of the Board of Freeholders for the purpose of pre- 
paring a new charter, presented an opportunity which we might have em- 
braced to express our views upon municipal matters, but no united action 
appears to have been taken by us, and the provision contained therein for 
the creation of a fully-paid fire department was not the result of any 
especial effort of ours. 

Our main opportunity is, of course, presented in the primaries, in the 
conventions, and at the polls, and those of us who are not priviledged to 
exercise the electoral franchise, can. by our individual exertions among our 
friends and employees, to a large extent, contribute to the general good, in 
spite of the fact that we cannot by our votes accentuate our wishes. 

It is not only in politics that an organized effort on our part would prove 
of great benefit to us. An active participation as a body in other public 
affairs affecting our interests, would also lead to good results. We. as un- 
derwriters, are as much interested in the building up of San Francisco and 
the entire Pacific Coast, as any other section of the community, and such 
enterprises as the Nicaragua canal, the San Joaquin Valley railroad, the 
establishment of irrigation, and reclamation districts, the formation of 
colonization schemes, etc.. should meet with our hearty support and ap- 
proval. The opportunity to participate in the deliberations of organizations 
formed for the purpose of developing our industries, and for the purpose of 
securing good government, should be embraced by us, and in a general way 
we should endeavor to make our influence as a body felt in proportion to 
the importance of the interests we represent. 


These ideas have been hastily strung- together, and nothing but a bare 
outline of the possibilities to be obtained by organized effort, has been pre- 
sented. I think, however, the subject is worthy of consideration, and feel 
that we have never yet, to any extent, wielded the power, that, as a com- 
bined body, we have the right to exercise. 

Respectfully submitted, 

( A pplause. ) 

The President — I am sure Mr. Driffield has given us a very sug- 
gestive paper, and if it bears its proper fruit we will all turn states- 
men and politicians. 

We would be glad to hear any remarks the gentlemen may have 
to make on the subject of this paper. 

The next business in order, gentlemen, will be the report of the 
committee on the re-insurance clause. 

Mr. Osborn — In the absence of Mr. Tyson, the chairman. I will 
read the report. (Reading:) 

To fJic President and Members of the Fire Underwriters' Association of the 

Gentlemen : During the past year controversy having arisen as to the 
liability under and construction of the usual re-insurance clause, a com- 
mittee of this Association was appointed to consider the matter, and pre- 
sent at a subsequent meeting a form to be submitted to the Board of Un- 
derwriters. Your committee met, drafted the form hereinafter mentioned, 
and submitted the same, with a letter inviting criticism, to the various 
managers here. Few responses were received, and this undoubtedly owing 
to the fact that their attention was more fully occupied in union matters. 
More engrossing subjects disturbing the profession have precluded your 
committee from being in a position to present a report such as they would 
wish at this meeting. Suffice to say. however, that the following was 
drafted by us, and while defective, was presented more in order to elicit 
criticism than otherwise : 

This policy is subject to the same risks, valuations, conditions, transfers, 
endorsements, adjustments and payments, as are, or may be taken, or made 
by the re-insured company, and the liability of this company is hereby 
limited to (5-10) of the amount paid by the re-insured company. 

It is understood and agreed, that, in no event shall this company be 
liable for more than the amount mentioned in this policy. 

One response suggests the following change to the above form. Insert 
the word " expenses'" succeeding the word ''adjustments.'' and the words, 


"under this policy" succeeding "re-insured company.*" on the third line 
from the last. 

Another suggestion is as follows: Change the first three lines, making 
it read, " this policy is subject to the same risks, valuations, conditions, ad- 
justments and payments as taken, and, or made by the re-insured company, 
also to the same transfers and endorsements which may hereafter be 
made, provided, due notice be given this company, and the liability, etc."" 
The writer of this letter further adds, "You see under your proposed clause 
the re-insured company can transfer its liability to some place or to some 
risk which the re-insured company would be debarred from writing, and is 
not called upon to give the re-insuring company any notice. By making 
the change suggested it becomes encumbent upon the re-insured company 
to notify its re-insurance of all such changes, and the re-insuring companies 
have the option of cancelling their liability." 

There were other suggestions of a minor character which we omit and 
would suggest that at this meeting some discussion take place so as to give 
the committee ideas that it is not already possessed of, and then if the sub- 
ject be referred to this committee, we promise, at a very early date, to 
formulate a clause that will meet the requirements of this vexed question. 
Very respectfully submitted. 

T. E. POPE. 

The President — You have heard the report of this committee : 
what is your pleasure? 

Mr. Folger — I would move that the report be accepted and printed 
in the proceedings. 

The President — It is moved and seconded that the report of this 
committee be accepted and printed in our proceedings. Are there 
any remarks? 

Mr. Osborn — As one of this committee I would like to say that we 
practically met only once. The second meeting was without result. 
because there were not enough members present. The first form 
was submitted to the managers with a request that they return it 
with their comments, if any. Very few replies were received, and 
those that reached us showed conclusively that the form was more 
or less defective. The object of the committee in presenting this 
report is simply to get ideas, if possible, and then we will take the 
matter up at a subsequent meeting, if it be re-referred to us. But if 


the matter is simply placed on the minutes as per this motion — there 
is no provision made for re-referring it — the matter will simply drop. 

Mr. Folger — The object of the motion was simply to dispose of 
the report. If there is no objection. I will offer the suggestion that 
the Secretary be instructed to print in circular form, the form of re- 
insurance clause proposed by this committee, and a copy thereof be 
sent to each member of this Association with a request for his views. 
I take it from the report of the committee. Mr. President, that the 
form of re-insurance clause was sent only to managers, and while it 
is undoubtedly true that they are far better prepared to pass upon 
the form than most of the members of this Association, who are not 
managers, it is true that they have less time, and experience in the 
past has shown that this Association is composed of men who will 
give replies. And I would move that the committee be continued. 

The President — The first motion made by Mr. Folger has not yet 
been put. It was that the report of the committee be received and 
printed in the proceedings. Are you ready for the question? All 
favoring it will signify the same by saying aye. Contrary, no. 
(Several noes.) 

The President — The ayes seem to have it. The ayes have it. 

Now we have Mr. Folger 's second motion. It is moved and 
seconded that a copy of this report be furnished to the members of 
the Association, and that they be invited to criticise it and report 
back to the committee, and that the report itself be referred to them 
for further action. 

Now, without desiring in the least to influence you in your action, 
it seems to me that a large number of our members — how many 
members have we ? 

The Secretary — One hundred and ninety-seven. 

The Pi^esident — That out of the 197 members perhaps less than 
half of them are really interested in the subject-matter of this clause, 
because it is a matter simply between companies, and it arose here 
from the fact that it was a manager who first brought the question 
up. It is a very important subject, because the re-insurance con- 
tracts between companies are very loosely drawn, and losses are settled 


mostly on good faith, or common good practice — a desire to pay their 
re-insuranoe where the principal suffers a loss. 

I would say that some little expense might be saved to the Asso- 
ciation in having this report printed in the proceedings. Then 
members having any objections to make could send them to the com- 
mit tee. However, the motion is before you as made by Mr. Folger. 

Mr. Folger — I did not realize fully the force of what you say, that 
t his is a matter for managers purely and simply, but I would adopt 
the suggestion made by Mr. Driffield, that I withdraw the motion. 
and substitute this: That the re-insurance clause itself be made the 
subject of discussion at the next quarterly meeting of the Association. 

The President — With the consent of the second. Mr. Folger has 
withdrawn his former motion and now makes this motion: That 
this clause be made the subject of discussion at the next quarterly 
meeting of the Association. Is there a second? (Motion duly 
seconded. ) 

It is moved and seconded that this clause be made the subject of 
discussion at the next quarterly meeting. Are there any remarks? 

Mr. Kinne — It seems to me that if a motion of this kind prevails, 
it would be entirely trivial, in the way of getting at any result. At 
the next quarterly meeting there will be seven or eight members 
present, and they will discuss it. They will simply talk about it, and 
do nothing. We have got a meeting here to-day for the very pur- 
pose of discussing these matters of importance, as outlined by the 
committee. There is a difference of opinion as to how the re-insur- 
ance clause should be worded, particularly in the manner of the 
endorsement following from the re-insured company to the insuring 
company. That is the main point in the contention, and now to 
postpone action and discussion when we are here for that purpose, as 
well as to listen to the papers, it seems to me is entirely out of the 
order of things for which this annual meeting is called. We do not 
come here simply to listen to the papers and have a dinner at the 
close of our meeting, but to discuss matters that come up. This 
report is brought up in that shape that it may invite discussion, and 
if this motion prevails to refer it to a meeting where there will be 
seven or eight, or perhaps a dozen — that is our average attendance 


at the quarterly meetings, as you all know — that then we shall be 
simply putting the thing off, and we may as well drop the whole 
subject entirely, and not bother our heads about it. I am decidedly 
opposed to referring it to the quarterly meeting, where but a few of 
us will talk about it. 

Mr. Driffield — I agree with what Colonel Kinne has said in regard 
to this question. The suggestion I made to Mr. Polger was simply a 
whispered one. and one I thought he would incorporate with his 
previous motion. That is. to have replies made, and those replies to 
be submitted to the quarterly meeting. I think with Colonel Kinne. 
that we are here for the purpose of discussion. I do not think that 
we have had enough of it at this meeting. It is very well for those 
who care to take part in the discussion to continue it as far as w T e 
can, but we cannot come to any final conclusion. We w T ant to get a 
concensus of opinion larger and broader than we can obtain at this 
meeting, and this will be accomplished by all the correspondence 
that may be received by the Secretary, and I think that while we 
might discuss it now we should make it a special order for business 
at the next quarterly meeting of the Association as well. 

Mr. Lowden — I entirely agree with Colonel Kinne on that propo- 
sition. As a member of the committee, I would like to have it dis- 
cussed at this meeting, and I would move as a substitute for Mr. 
Folger's motion, that we now proceed to the discussion of this re- 
insurance clause. 

Mr. Folger — I accept the substitute, and withdraw the other. 

The President — Mr. Folger's motion is withdrawn, and the matter 
is now before you for discussion. 

Mr. Gunnison — Mr. President. I take the floor not to argue the 
question pro or con, but rather to explain why I voted "no" on the 
resolution passed previous to the last resolution. The reason of that 
is simply this: That while I was willing to receive the report and 
place it on file. I do not think it ought to be printed in the minutes, 
because it is not conclusive : there is nothing in it that any one would 
desire to read, or care to read, except that the committee's action 
places it before us so that we could discuss it, and to go and print 


thai in our proceedings, I think, would be useless. There is nothing 
conclusive in it at all. We come to no conclusion in the matter, as 
to what clause should or should not be put in. They simply gave 
these remarks for our consideration. 

The President — If you will pardon me, Mr. Gunnison, that motion 
has been disposed of, and the matter now before us is the report 

Mr. Gunnison — I know. I simply say this in explanation of my 

The President — There is an advantage, I will say, in publishing 
it in the minutes, however. This clause which becomes part of the 
contracts, cannot be passed upon hurriedly, and the publication of 
this report in the minutes will enable us to take the form recom- 
mended by the committee, and such suggestions as may be made 
here, and out of this perhaps something will come which may be 
put into effect. I was quite interested in the report of the com- 
mittee, and I think that one suggestion which I made to the com- 
mittee, perhaps, is embodied in the latter part of this report. Mr. 
Faymonville talked with me on the subject several times, and we 
concluded that what we ought to do was to get a clause which would 
be acceptable to a few, and then, on the plan on which the new 
Board of Fire Underwriters was organized, invite a few more, and 
get them to agree to it, and then invite a few more : thus, getting 
such changes as all could agree on, until we should have a re-insur- 
ance clause that some twenty or thirty of the offices would require 
on every policy received or sent out, and then that would naturally 
influence all the business, practically, in the city. That was the plan 
we had thought of adopting, and it was believed to be a good one. 

Mr. Kinne — In regard to the difference between the two clauses, 
as reported by the committee, it certainly is evident without much 
discussion that there is simply one underlying principle in regard to 
the difference. One says that you shall follow all the undertakings 
of the re-insured company, not so much as pertains to the adjust- 
ment and payment of the loss, because nobody has ever had any 
particular kick about that, but also in the way of all endorsements. 


This came to our attention some two or three years ago ; and the 
second clause reported by the committee, I think, is word for word 
one that I suggested, and for which I had rubber stamps printed. 
It seems to me that it is right and proper that every re-insured com- 
pany, if they make an endorsement upon their policy, and their 
contract is changed, they should notify the re-insuring company, so 
they may know whether they can continue to carry the line, if trans- 
ferred into a place where they have got a full line themselves, or into 
a risk where they cannot carry at all, because it may have been upon 
their prohibited list. That has worked very well for two or three 
months. Finally one of the prominent insurance managers in this 
city, who represents large interests, and did not care to be hampered 
with the idea of seeing that his clerks should perform their duty 
properly, said that he would not re-insure in the Liverpool and 
London and Globe, if we had that clause upon the policy. Why ? 
Simply because if one of my clerks should happen to forget to notify 
you I do not want to be out my re-insurance. Then, said I, suppose 
it was direct insurance and the clerk of the insured should happen 
to make a mistake and not transfer a policy, why of course then the 
assured ought to get his money just the same after the company 
knew about it following a fire. Well, he did not exactly think that 
would be an analagous case, but that there ought to be the same 
relations between the insurance companies as there would be between 
the assured and the direst insurance without .any notification of 
endorsements. I could not see it ; I do not see it yet. I think this 
Association to-day, after further discussion of the matter, can recom- 
mend a clause that shall say that the company that is re-insured, if 
any endorsement is made relating to the condition of the risk, or its 
transfer to another locality, that that company should certainly 
notify the reinsuring company, in order that they may know whether 
they have got an overline, or, possibly, placing it at a point where 
they do not care to write at all. It seems to me so entirely proper 
that I cannot see now, and could not then, why the manager of any 
company should not be willing to acquiesce in a clause of that kind. 
Certainly we would. As a practical insurance proposition, I contend 
that if there is any change made in the contract, the re-insured 


should notify the company reinsuring them just the same as Peter 
Smith, or John Brown would the company that insured them direct. 
That is my opinion in the matter, and I hope we will hear from 
ot hers on t ho subjed . 

Mr. Gunnison — If they failed to notify them would it not work a 
cancellation of the re-insurance policy? 

Mr. Kinne — Certainly. If they fail to transfer the risk, the risk 
is not transferred. That would be putting them on the same level 
as the ordinary insurer. 

Mr. Osborn — We canvassed that subject, and the question was 
raised in the committee as to whether the companies would consent 
to that or not. If their re-insurance contracts were subject to the 
vvvy point that Colonel Kinne marked out — the error of the clerk — 
it would be a detriment to them, and they would not be willing to 
re-insure their risks with a company demanding that clause. But 
the Colonel has set forth the reasons why that is reasonable. Now 
there could be a qualification made limiting the time, say to ten 
days. That would give the endorsement clerk an opportunity to 
make his endorsement and report it to the re-insuring company, and 
while this report does not incorporate that, it might have been, but 
was overlooked. 

Mr. Lowden — Perhaps an explanation of the circumstances that 
led to the appointment of this committee for the benefit of the mem- 
bers who are not familiar with them, might be in order. This was 
the case, and the committee was appointed for the express purpose 
of avoiding the difficulty that a company recently encountered. The 
original policy was issued, we will say. for $10,000. the re-insuring 
company accepting 5.000. and during the life of the policy the re- 
insured company cancelled $3,500 of its $10,000 policy. Before an 
endorsement reached the office of the re-insuring company a fire 
occurred causing a total loss. The re-insured company claimed from 
the re-insuring company $5,000. and after submitting the matter to 
Mr. Van Ness, that gentleman held that the re-insured company had 
a claim on the re-insuring company for the full $5,000. Now. the 
object of the committee was to make an endorsement that would 


obviate that difficulty. Suppose that, instead of cancelling $3,500 of 
the $10,000. the original company had cancelled $5,000. then, when a 
loss came along the re-insuring company had the whole of the loss to 
pay. and this was not contemplated when the contract was entered 
into. This is why the committee recommended a change in the form 
of the re-insurance clause, viz: This policy is subject to the same 
risks, valuations, conditions, transfers, endorsements, adjustments 
and payments as are or may be taken by the re-insured company. 
And the liability — here is the point — the liability of this company is 
hereby limited to. say five-tenths or the liability you assume at first. 
It is still limited to that) of the amount paid by the re-insured com- 
pany. So that in case a part of the original policy is cancelled the 
company that re-insured cannot throw upon you more than the 
original proportion accepted by you. That was the object we had 
in view when we took the matter in hand. The other matters 
requiring notice of endorsement to reach the office of the re-insuring 
company. I think very good, but there ought to be a limit to the 
time. The principal object was to avoid the difficulty that this man- 
ager found himself in who paid more than his pro rata proportion. 

Mr. Osborn — There was another point that I presume Mr. Lowden 
has forgotten. It slipped my mind, and that is the objection raised 
against re-insurance on policies "issued or to be issued.' ' Of course, 
the managers frequently raise objections to this form, as being 
specifically limited. The way the contract was made on that class 
of policy they could make a change, but this clause would do in 
ordinary contracts where there was specific insurance in the first 

The President — Are there any more remarks on this subject, 
gentlemen ? 

Mr. Driffield — I think that the conclusions arrived at by the com- 
mittee are good. I think that it is very wise that the liability of the 
company re-insuring should be limited to the proportionate part that 
the re-insured company originally accepted. But apart from this 
question of endorsement and transfer. I think other questions should 
enter into the discussion. I have in mind a loss which occurred not 
a great while ago. in Los Alamos, a hotel loss in which I think you. 


sir. were yourself personally interested. The Trans-Atlantic was a 
re-insurer of the German-American, and I am sorry to say that after 
a contest we have had to pay the face of our policy, and about 75 or 
80 per cent, in addition on account of legal expenses in connection 
therewith. According to the clause that is suggested by the com- 
mittee, a re-insuring company would be bound to pay pro rata of all 
the expenses incurred in the resistance of losses by the original com- 
pany, even though it was willing to pay the full face of its policy, 
which is the full amount of liability assumed when taking the risk. 
Now it seems to me that that question should be also considered, 
because there may be occasions upon which we would prefer to pay 
the full face of our policy than take chances in litigation. And I 
think expenses on adjustments might be eliminated. Regarding 
endorsements, I fully agree with the report of the committee. I 
think the amount of liability should be made proportionate to the 
liability of the original policy. That is preferable to having it 
based upon the amount of the re-insured 's policy when the re- 
insured's policy might be subsequently decreased. 

The President — Any other remarks on the subject? 

Mr. Argall — There is one point which occurs to me and which I 
think must have been brought up for discussion before this — namely, 
the patent unsuitability of the ordinary policy contract for re-insur- 
ance arrangements, as between companies. That is to say, we adopt 
and use a policy blank — the New York standard, or whatever it is — 
which contains a number of carefully worded clauses and provisions, 
and then we go to work and sweep away the whole effect of them by 
one little rubber stamp not more than five lines in length. It might 
be well that, with a re-reference of this matter to the committee, 
some instructions should be coupled as to the preparation of a special 
re-insurance contract, which would cover the essential points more 
fully. And in this connection I would say that, so far my knowledge 
goes, the insurance companies of America are literally the only com- 
panies in the world which use the same form of policy for re-insur 
ance as they do for direct transactions. 

Mr. Folger — I think, Mr. President, we have got to deal with 
matters as we find them. There is no doubt that the American 


forms are all simple, if you judge of them simply by their length. 
While serving on the library committee and accumulating reports 
of associations in Australia and England, I noticed, If I recollect 
rightly, contracts or long clauses, one or both, in connection with 
'•guarantee business. " which I think is the English term for re-insur- 
ance. The committee has endeavored to include in our own library 
those clauses or contracts: but I doubt very much, Mr. President, 
whether they would be acceptable to the men in our business. The 
demand in the American business is brevity. It is not always as 
complete, or as satisfactory, or as valuable in the end, but there is 
no doubt that in all our unions there is a demand for brevity. 

Mr. Argall — The guarantee agreement, which I have particularly 
in mind, if I recollect rightly, has about nine ordinary lines of print- 

Mr. Folger — I think, when I saw it. it had fourteen. 

Mr. Kinne — I think we ought to secure a better condition of 
affairs, if there is anything wrong about it, by a gradual process, 
for we cannot regulate the whole matter at once. A condition 
worded properly, as an added one to the contract between the in- 
sured and the company, so as to make the same applicable to the re- 
insuring company, can be arrived at so that it can embody in itself 
something that will do away with the defects that we have stumbled 
up against in oiir practical experience in the last few years. And it 
seems to me that to ask for ideas from oar one hundred and seventy 
odd members, and then have them sent in, without this matter of 
discussing, as we have right here, which I think is the proper way 
to handle anything, is utter foolishness. It is only putting the thing 
further along, and we will accomplish nothing. I believe that this 
matter should be referred to the committee, with instructions to 
embody in a clause, properly prepared, first, the idea that the re- 
insuring Company shall only pay a loss pro rata, in proportion to 
the amounts as at first assumed — when the first contract was made — 
and, second, that notification of all endorsements should be made to 
the re-insuring company, within a reasonable time, although you do 
not have to do that if you are insured direct. If a man removed his 
furniture to-day to another location and did not notify you, and it 


burns to-morrow, he has no contract with you. But of course, the 
re-insuring company, often times, don't know of the transfer until 
it reaches the office; therefore, a re-insuring- company will have to 
take naturally more chances than they would with the party direct. 
Lrt the matter be referred to the committee with the suggestions as 
outlined by the several remarks made here, providing pro rata pay- 
ment;- and notification of all endorsements within a limited time, 
and I think it is just exactly what we all see the necessity for. and 
would ask the managers to adopt. I move that such action he 

The President — You have heard the motion, which has "been 
seconded, that the clause which we have been discussing be referred 
hack to the committee, that they be instructed to prepare a form 
which shall embody the suggestions that have been developed dur- 
ing the discussion: and that it be presented to the members, to the 
managers I presume, for adoption? 

Mr. Kinne — Requesting their adoption. 

Mr. Gunnison— Is that a substitute for the former motion? 

The President — The other motion was withdrawn. 

I might make this one suggestion. That but very few of the 
managers have instructions from their head office not to issue any 
policy unless there is a clause, providing that the re-insured com- 
pany shall carry an amount equal to the line carried by the re-in- 
suring company. 

Mr. Kinne — That is on all fours with this very idea, as it limits 
the liability under a reduced policy in the same proportion as first 

The President — That is impracticable: that would have to be a 
subsequent clause, because a good many companies do not care how 
much the re-insured company retains. If they like the risk they 
will take their line, whether the re-insured carries a like line or not. 

Mr. Lowden— I was going to say, Mr. President, that was con- 
sidered by the committee. We will say that company A has two 
policies of $5,000 each on a risk, and wishing to carry $6,000, re- 
insures $4,000 in company B. and one of the $5,000 policies runs out 


and is not renewed, then company A has $1,000 and company B 
has $4,000. What are you going to do? 

A Voice — Cancel. 

Mr. Lowden — If a fire occurs pending renewal, the re-insuring 
company has to pay $4,000 to the other company 's one thousand. 

The President — These questions come up all the time in the mat- 
ter of re-insurance. As I understand, the clause suggested by the 
committee as amended will answer every purpose except that one — 
where companies require the re-insured company to carry an equal 
line with them — and that can be overcome by another clause, if 

Mr. Kinne's motion was then put and carried, unanimously. 

Mr. Smalley — I would like to introduce to this Association Mr. 
R. F. Stuart of Seattle, who has just come in. 

(The members rising.) 

The President — We will now have a report of the committee on 
mortgage clause. Mr. Lowden. 

Mr. Lowden — There is no report, sir. Coming in here, perhaps I 
might read the report of the committee on Presidents address, 
which refers to the mortgage clause. 

The President — That will come under special committees. I will 
say that I took this method of getting revenge on my friend, Mr. 
Lowden. He was chairman of that committee, and I have been 
after him for a report. He called on me the other day and said it 
would be impossible for him to make the report on account of his 
heavy work in connection with the organization of the new board of 
underwriters. I told him that he should be put on the programme 
for punishment; and by so doing came very near keeping him away 
from the meeting. The next in order, will be the report of the 
committee on memorial of F. H. Swett. 

Mr. Driffield — Mr. Butler, who is the chairman of that commit- 
tee, asked me, in his absence, to read the report of the committee 
appointed to draft resolutions. 



The committee appointed to draft resolutions in memory of the 
Late Prank H. Swett, beg leave to report as follows: 

Whereas, The ranks of this Association have been 
broken by the loss of Mr. FRANK H. SWETT, who 
expired on the 6th day of November, 1894, after a pro- 
longed course of suffering caused by an accidental gunshot 
wound ; 

Resolved, That the Fire Underwriters' Association of 
the Pacific feel it incumbent upon them to pay a brief 
and hearty tribute to the many excellent qualities and 
attainments of our late associate. 

During a career extending over thirty years, whether 
as patriot soldier, fighting for the preservation of the 
unity of his beloved country, or as a man of business, and 
particularly special agent and fire adjuster for many 
years on the Pacific Coast, his zeal and devotion to duty 
were always conspicuous traits, and those with whom he 
mingled most cannot but feel the greatest regret that in 
the maturity of his years and in the enjoyment of all 
that life holds dear he should be thus so suddenly taken 
away from our midst. 

Resolved, That the heartfelt sympathy of this Associa- 
tion be tendered to the bereaved family of our late friend. 

Resolved, That this resolution be ordered spread upon 
the minutes, and that the Secretary be instructed to 
send a copv of the same to the family. 




San Francisco, February 18, 1895. 

The President — All who will adopt that report, will do so by 
rising". (The members all rising. ) It is adopted. We will now have 
the report of the committee on President's address. 

Mr. Lowden — (Reading:) 

Sax Francisco, February 20, 1895. 
To the President and Members of the Fire Underwriters' Association of the 

Pacific : 
Gentlemen : — 

We have considered the various suggestions and recommendations con- 
tained in the admirable address delivered by our President, and beg leave 
to report thereon as follows : 

There are a number of topics presented in the address, such as fire waste, 
lines, exposures, the relative hazards of buildings and stocks, the maximum 


rate, fire coroners, tariff associations, etc., any one of which is worthy of 
careful treatment, but which cannot conveniently be passed upon in the 
report of a committee. We recommend that the President-elect refer these 
topics to members conversant with them for treatment in special papers at 
the next or succeeding- meetings. 

We recommend that the new library committee be authorized to expend 
up to $150 during the coming year, provided that a report of purchases and 
expenses be submitted to the Executive Committee of each $50 incurred 
before obligating the association further. 

As only one year's time has elapsed since the change from monthly to 
quarterly meetings and from elections by regular meetings to approval by 
an election committee, we are of the opinion that it is inexpedient to alter 
the present methods until they have been given further trial. 

In view of the success which attended the reception to the Fire Under- 
writers' Clerks' Association, several months ago, we recommend that such 
a reception be made an annual feature of our work, the date to be fixed by 
the Executive Committee, about midway between annual meetings. 


Reference to this subject was made in the address of President Ives at 
the last annual meeting, and at the suggestion of a committee appointed to 
consider the various recommendations contained in that address, an addi- 
tional committee on Mortgage Clauses was appointed to make a report at 
this meeting. 

We regret to learn that the committee has been unable to offer a solution 
of the problem, or to make a recommendation of any sort ; but this is hardly 
surprising if we consider for a moment the difficulties surrounding the 

In any consideration of the subject, it must be borne in mind that the 
mortgagee wants absolute indemnity, and, so long as competition is an influ- 
ential factor in our business, he is bound to get it. Even if he does not 
obtain it willingly from the companies themselves, the courts seem to be 
disposed to give it to him by construing our most approved forms of the 
clause wholly in his favor. It would appear that the courts are influenced 
in their decisions by a desire to afford the greatest possible protection to 
the mortgagee. They evidently reason that" the insurance company in 
attaching the mortgage clause to their policies have, for a consideration, 
entered into a contract by which they waive certain conditions (a violation 
of which would prevent recovery by the mortgagor) and they consider that 
the new contract should be construed with the utmost liberality. 

This is evidenced by certain recent decisions, one of which makes our 
much valued contribution clause practically of no value. In the case of 
Eddy vs. London Assurance Corporation, N. Y. C. A. 38, N. E. R. 307, where 
a policy payable to the mortgagee, as his interest might appear, provided 
that the policy should not be invalidated as to him by any act of the owner. 
Held, that additional insurance procured by the owner, in which the mort- 
gagee had no interest, did not affect the mortgagee's right to recover the 
full amount of the policy, though the policy also provided that the insurer 


should not be liable for a greater proportion of any loss than the amount 
thereby insured should bear to the whole amount of the insurance on the 
property. Nor does such insurance by the mortgagor affect the policy as to 
the mortgagee, though the policy provided that the insurer was only to be 
Liable in the proportion in which the sum it insured should bear to the 
whole amount of insurance on the property held by any parties having an 
insurable interest therein. 

The clause in our standard form requiring the mortgagee to give notice 
of any change in ownership has also been rendered valueless by a decision 
of the Supreme Court of Nebraska in the case of the Omaha Loan & Trust 
( Jo. vs. Phenix Ins. Co., in which it was held " that the neglect of the trust 
company to notify the insurance company of the sale of the mortgaged prop- 
erty did not void the policy as to the trust company. The policy does not 
provide when the mortgagee shall give this notice, nor is there any pro- 
vision in the policy or mortgagee clause to the effect that in case the mort- 
gagee comes into possession of knowledge that the hazard of the risk has 
been increased or that the property has been conveyed, and neglects to 
notify the insurance company thereof, the policy shall therefore be void." 

These, and other decisions which might be quoted, coupled with existing 
competition for business, render the outlook for an improvement in the 
form most discouraging. If what we have heretofore considered our most 
ironclad clause can be so easily punched full of holes, it would seem neces- 
sary for a stronger form to be drawn up, but what hope have we that it 
would be accepted, or that the companies would combine to require its use ! 

The suggestion of the President that a solution of this question should 
be found in the rate is considered by your committee a possible one, but at 
present would seem to be impracticable. We are more inclined to the 
opinion that the plan offered by the committee last year, if properly digested 
and formulated, is as much of a concession as we can obtain from the mort- 
gage companies, having already sold to them our birthright for a mess of 

We renew the recommendations made in previous years that it be con- 
sidered the sense of this Association that a simple classification of fire 
premiums and losses should be undertaken by the Board of Fire Under- 
writers of the Pacific. We suggest that this can" best be done by using the 
eight general classes prescribed by the Committee on Statistics of the 
National Board of Fire Underwriters for recording premiums in an exam- 
iner's department, and leaving the members of the Board to report losses, 
either under the same eight classes or in the complete form suggested by 
the National Board in its latest report on the subject, giving 1,687 classes. 
However crude the scheme undertaken might be, it is inevitable that the 
results of such a classification by the Board would be of great value, even 
if the knowledge obtained were to be confined strictly to the Executive 
Committee of the Board for the use of surveyors, who fix our rates under 
their direction. 

Adjustments. — We concur with the President in deprecating lump settle- 
ments of fire losses, but we think a middle course is the only safe one. 
There are times when a compromise is the best, if not the only way, out of 


the difficulty, but whenever it be possible, losses should be settled strictly 
upon the basis of actual indemnity. 

Respectfully submitted. 




The President — Gentlemen, you have heard the report of the 
committee; what is your pleasure concerning' it? 

Mr. Devlin — I move that the report be received and the committee 
discharged. In doing so, I would state in regard to the contribution 
clause in the mortgagee clause that as one swallow does not make a 
summer neither does one decision make a law. There are a great 
many decisions on the other side and many of the courts have 
repeatedly held under the mortgagee clause that a company is not 
liable under its policy for a greater proportion of any loss or damage 
sustained than the sum insured bears to the whole amount of insur- 
ance on the property destroyed, thereby carrying out fully the 
contribution clause, and which I think is sound law. 

There are a great many decisions in any case that may be pre- 
sented, as everyone knows who has given the subject study, and while 
the case cited, coming from high authority as it does, is worthy of 
consideration, yet there may be found in this case as in others, upon 
reading the full decision, there were circumstances peculiar to this 
case alone which caused the court to decide as it did. I am there- 
fore still a strong believer in the contribution clause. I only hope 
that the companies may join together and agree upon some clause 
and insist upon it being placed upon all policies where the mortgagee 
clause is required. 

Mr. Lowden — I would like to state that the decision was rendered 
by the New York Court of Appeals, which is generally considered a 
good authority in the United States. 

The President — You have heard the motion, that the report be 
adopted. Are you ready for the question? 

Mr. Folger — Mr. President, while the report of the committee 
does not carry that idea in so many words, it was the intention that 
the mortgage clause should be referred to this committee again 
during the next year ; and, in fact, if it is in order, I move that the 


question of the mortgage clause be referred back to the same com- 
mitter, who will be continued, with instructions to report upon the 
clause at the next meeting-. 

The I * resident — Are you ready for the question'^ All favoring the 
motion will signify it by saying aye. Contrary, no. Carried. There 
are several recommendations in the report of the Executive Com- 
mittee. I would ask the Secretary, whether he understood they 
were adopted? The motion was that the report be received and 
placed on file. 

Mr. Eolger — As Chairman of the Executive Committee, my recol- 
lection is that the President himself suggested that the recommen- 
dations therein could be referred to the new Executive Committee. 
in view of the fact of there being no other committee to whom it 
could be referred. 

Mr. Driffield — That is the fact, I think. Our previous practice 
has been to refer the report of the Executive Committee as well as 
that of the President to a committee to report during the coming 
year. Would it be necessary that another committee should pass 
upon the recommendations of the Executive Committee ? 

The President — The difference between the President's report and 
the report of the Executive Committee is that the President is alone 
in making his recommendations, while the Executive Committee is 
supposed to have had some conferences on the subject. I believe 
there are one or two points that ought to be considered now. if the 
Secretary has the report. 

The Secretary — I haven't it here. 

The President — There were one or two things I remember partic- 
ularly in reference to expenses, which ought to be acted upon, unless 
you will authorize the incoming Executive Committee to take up 
this report, with power to act. 

Mr. Osborn — I move, Mr. President, that the report of the Execu- 
tive Committee be referred to the incoming Executive Committee 
with power to act. 

The President — You have heard the motion, gentlemen. Are there 
any remarks on the subject? All favoring it will signify the same 


by saying aye. Contrary, no. Carried. The next in order, gentle- 
men, is the election of officers. We await your pleasure. The first, 
the election of a President. 

Mr. Lowden — Following out the time-honored custom, Mr. Pres- 
ident, I should like to place in nomination for President of our 
Association, Mr. V. C. Driffield, our present Vice-President. 

Several voices— Second the nomination. 

Mr. Dick — I move that the nomination be closed. 

The President — It is moved and seconded that the nomination be 
closed. Are you ready for the question? All favoring it will 
signify the same by saying aye. Contrary, no. Carried. 

Mr. Dick — I move that the Secretary cast the vote of the Asso- 

The President — It is moved and seconded that the Secretary cast 
the vote of the Association for Mr. V. C. Driffield for President of 
the Association for the ensuing year. Are you ready for the 
question? All favoring it will signify the same by saying aye. 
Contrary, no. Carried. 

The Secretary — Mr. Driffield is elected. 

Mr. Driffield — I feel a little bit too flurried to make any remarks. 
All I can say is, that I very heartily thank you and I appreciate the 
honor you have conferred upon me. 

The Secretary — The next in order, is Vice-President, I believe? 

The President — Yes, sir. The election of Vice-President. 

Mr. Osborn — I wish to make a nomination for Vice-President. 
There is pleasure in doing this, and in placing this name before the 
Association I know that it will meet with approval and a unani- 
mous vote. The gentleman whose name will come before you is one 
well known to you. He has given us valued service in more ways 
than one. I have appreciated that during my term of office as 
Secretary, in which I have come in contact with his efficient work, 
and also to the extent to which he has given publicity and reputation 
to the Association abroad. As Secretary have received several letters 
manifesting this, and know that during his service as chairman of 


the library committee, the Association was introduced in the foreign 
countries, and especially throughout our Eastern States. Passing 
that, to his services as a member, in contributing to the literature of 
the Association, it goes without saying. It is needless to take any 
further of your time. I wish to place in nomination for Vice-Presi- 
dent o( our Association, Mr. Herbert Folger of Portland, i Ap- 

The President — The nomination is seconded from several quar- 
ters. Are there any other nominations? 

Mr. Osborn — I move that the nominations be closed. 

The President — It is moved and seconded that the nominations 
be closed. All favoring this motion signify it by saying aye. Con- 
trary, no. It is so ordered. 

Mr. Geo. F. Grant — I move that the Secretary cast the ballot of 
the Association for Mr. Folger as Vice-President. 

The President— All favoring the motion signify it by saying aye. 
Contrary, no. 

The Secretary — Mr. Herbert Folger is elected Vice-President of 
the Association. (Laughter and applause.) 

The President — The motion is carried. 

Mr. Folger — As a bright member of this Association has said 
he has not heard of the Vice-President doing anything, therefore, 
during my term. I expect to have nothing but the honors. I can as- 
sure you. and I am certain the members appreciate it is no empty 
honor in my estimation, and it is a compliment which I am very 
glad indeed to have been paid. 

The President — The next in order will be the nomination of a 
Secretary and Treasurer. 

Mr. Geo. F. Grant — Mr. President. I take pleasure in nominating 
our present Secretary. Mr. R. W. Osborn. and I would also move 
that the present Secretary and Treasurer be authorized to draw a 
check for the usual amount for his services during the past year. 

Mr. Osborn— Mr. President. To the latter part of the motion no 
exceptions whatever can be taken, and. thanks to Mr. Grant, for he 


is always the thoughtful one on that line. But I wish to ask his 
permission to withdraw my name. Had it been known that he in- 
tended to make the nomination, we would have seen him. It is my 
wish not to again run for Secretary. I have served two terms, and 
have done the best I could. We all believe in distributing the 
honors, and for that reason, if Mr. Grant will permit, the name will 
be withdrawn. 

Mr. Geo. F. Grant — Very good. 

The President — As I understand it. the first part of Mr. Grant's 
motion only, is withdrawn. 

It is moved and seconded that the Secretary be authorized to 
draw upon himself as treasurer for $100. the usual compensation al- 
lowed the Secretary for his services. Are you ready for the. ques- 
tion? All favoring the motion will signify the same by saying aye. 
Contrary, no. So ordered. 

I will state, gentlemen, that this $100 is the best earned money 
that any of us could ever possess. You all feel good at this annual 
meeting, but between times, such a feeling does not always prevail. 
and it takes a good deal of encouragement and kindness to get the 
annual dues from some of you. Our Secretary has been very faithful 
in that particular. We are now ready for nominations for Secretary 
and Treasurer. 

Mr. Driffield — Mr. President, the name occurs to me of one 
who could fill this position in the interests of the Associa- 
tion, would be here on the ground, and whom I feel sure could bring 
to bear those persuasive and diplomatic powers that are sometimes 
necessary to hold the members together. 

I think the gentleman I am about to name is one who 
can serve the Association in a very acceptable manner. And I . 
take pleasure in placing in nomination for Secretary and Treasurer 
the name of Louis Weinmann, Assistant Secretary of the Fireman's 

Mr. Folger — I move that the nominations be closed. 

The President — You have heard the motion, that the nominations 
be closed. Are you ready for the question? All favoring it signify 
it by saying aye. Contrary, no. So ordered. 


Mr. Lowden — I move that the Secretary cast the ballot. 

The President — It is moved and seconded that the Secretary cast 
the ballot of the Association for Mr. Louis Weinmann. Are you 
ready for the question? All favoring the motion will signify it by 
Baying aye. Contrary, no. 

The Secretary — Mr. Weinmann is elected. 

The President — The next will be the election of the Executive 
( 'ommittee. 

Mr. Lowden — Mr. President, I would like to place in nomination, 
for chairman of that committee, a gentleman who has served us 
faithfully and well, Mr. Osborn. 

Mr. Driffield— Mr. President, I take great pleasure in seconding 
that nomination, and I think that the members cannot give too 
much credit to Mr. Osborn for the manner in which he has per- 
formed his duties as Secretary during the terms that he has occupied 
that position. He will make a most efficient chairman of the Execu- 
tive Committee. 

The President — You have heard the nomination of Mr. Osborn as 
chairman of the Executive Committee. 

Mr. Driffield — I would also propose the name of Mr. Frank J. 
Devlin, as a member of the Executive Committee. 

_Mr. Devlin — I think, Mr. President, that the position should be 
given to some other member. Some of the older members are more 
deserving of it. However, I bow to the inevitable. 

Mr. Edwards — I hope the gentleman will not withdraw. It is 
the younger members of the Association that we wish to throw the 
burden upon, and I hope he will take the position. 

Mr. Fogarty — I would propose as a third member of the Execu- 
tive Committee, my esteemed friend, Mr. Edwards. 

The President — You have all heard the nomination of Mr. 
Edwards. The three placed in nomination are Messrs. Osborn, Dev- 
lin and Edwards. Are there any other nominations? 

Mr. Edwards— For the same reason that I urged Mr. Devlin to 
serve. I think I should be replaced by some younger member. I 


would respectfully withdraw and decline to serve, and would nomi- 
nate Mr. Fogarty for the office. 

Mr. Butler — I second the motion. (Applause.) 

Mr. Butler — I move that the nominations be closed. 

The President — Are you ready for the question? It is moved 
and seconded that the nominations be closed. Are you ready for 
the question? All favoring it will signify it by saying aye. Con- 
trary, no. Carried. 

The President — Do I understand that Mr. Edwards declines? 

Mr. Edwards — Yes, sir. 

The President — I was about to say that Mr. Edwards looks as 
young as he did twelve years ago, when I became a member of the 
Association. (Laughter.) 

Mr. Edwards — I move that the Secretary be instructed to cast 
the ballot for R. W. Osborn, J. T. Fogarty and Frank J. Devlin, 
for the Executive Committee. 

The President — You have heard the motion. All in favor will 
signify it by saying aye. Contrary, no. Carried. 

The Secretary — Casting the ballot for myself is rather em- 
barrassing, but being commanded to do so, I always obey orders. 
They are elected. 

The President — I think the library committee is appointed. 

The Secretary — Yes, sir. The editor of the Knapsack is also ap- 

The President — I regret very much that we have thus far had 
no report from the library committee, but I have called for it, I 
think, at each session, and if there are no objections it may be re- 
ferred to the Executive Committee, and if approved by them, pub- 
lished in the minutes. All who will approve of this course will 
signify it by saying aye. Contrary, no. It is so ordered. Is there 
any other businsss? 

The Secretary — Yes, sir. The election of the committee of 
fifteen, and I would suggest that in the Secretary's report the recom- 
mendation was made that this committee, which is to be elected at 


this time, should be chosen from those who reside in the city. 
Sometimes two months pass in the effort to secure a ballot, because 
a number of the gentlemen on that committee were out of town, and 
twelve votes are required. 

The President — You have heard the suggestion of the Secretary. 
that the election committee be nominated, and that they be chosen 
from those who are constantly in attendance, in order that it may 
not be difficult to secure a vote on the names of applicants. 

Mr. Folger — I would suggest that Mr. Osborn proceed first to 
name the gentlemen with whom there has been no failure. 

The President — If there is no objection to this plan of procedure. 
it might be deferred until after the reading of the Knapsack, in 
order that Mr. Osborn be able to furnish a list of the members of the 
Association who will be in attendance. If there is no objection, that 
matter will be brought up a little later. Is there anything further 
in the way of business? If not, I am sure we will take great pleasure 
in hearing from Mr. Geo. F. Grant, editor of the Knapsack. 


Mr. Grant — Mr. President and gentlemen. The Knapsack this 
year is like the baby of the bad girl. There is not much to it. 
and it cannot do much harm. 


(Followed by prolonged applause.) 


Vol. XIX. February 19. 1895. No. 1. 

You might as well ask me to fly as to request something funny for the 
Knapsack this year, if that something requires time. I need hardly dwell 
on the reason why. 

This is a serious period, this fall of '94 and spring of '95. After many 
years of mutual understanding w r e were all at once happily engaged in the 
most formal manner in general and specific misunderstanding; whispers 
became commands ; and rumors grew strong as word of the holy writ. I say 
happily engaged, for to judge by the cheery tone and smiling faces, special 
agents found the prospect of a fight more than pleasing, and if they did not 


reflect the manager and his opinion it is too bad. The Fire Underwriters' 
Association of the Pacific was on trial, and if it had failed, saltpetre would 
not have saved the business, but the seeds sown twenty years ago come 
October were deeply rooted, and the boys at Virginia City in 1875 are now 
grave and reserved men; the spirit of harmony and good will, of mutual 
advantage by associated effort asserted itself in the hour of need and by 
the very boys who learned to know and trust each other during that cold 
thirty days of adjustment so long ago, they were able to meet and formulate 
a new plan, to bury the hatchet and smoke the pipe of peace. It was a 
great feat w T ell performed, and I congratulate you, each one, on the result. 
I am not the keeper of my neighbor's conscience, nor is it for me to cast 
stones at any man ; but by the power vested in me as editor of the Knap- 
sack I say unto you, if you are by word or deed, by indirection or mental 
reservation, retarding the progress of a successful and profitable insurance 
business on this Coast, you do that which, enriching nobody, makes you a 
marked and shining target for boys now growing up in this Association to 
fire at ; it is like tearing down with no intention of replacing or putting 
the gloss of right on that which is in reality wrong; it is sowing seed which 
in another twenty years may bring ruin. 

Perhaps the first business advice to have weight in the mind of the 
youth was expressed in the familiar line : "Goto the ant, thou sluggard, 
consider her ways and be wise." Having been liberally endowed by nature 
with those traits and attributes, w r hich tend to enlist sympathy with the 
sluggard, I accepted the admonition as personal, and turned my attention to 
the ant. The first specimen was found in the sugar barrel and she was 
particularly repulsive, being black and ugly and divided in the middle by a 
hair line having a pudgy ball on either side : I slew her. Reposing at a 
later date under an oaken tree in a green meadow, watching milk white 
clouds float over a light blue sky, I again found the ant, and she was numer- 
ous; when found she was within my trouser's leg; I considered her seri- 
ously and changed not only my position but the trousers. This was instinct. 
Thus far I had not that wisdom for which I yearned. It was many years 
later, in the town of Merced, before the full force of the proverb was dem- 
onstrated. In the capacity of special agent, I visited the San Joaquin 
district and came upon the ant at Merced. She was of the small red 
variety, agile and strong. In great numbers she was engaged in removing 
a pile of sand from one side of the walk to the other, and during my stay at 
Merced, with unremitting zeal, she struggled over the path with a load and 
trotted back empty-handed for more. Meantime, with varied step and gait, 
the villagers passed to and fro, representing all ages, sexes and conditions 
of man, and the point which arrested my attention and caused me to con- 
sider the ant was that of destruction. It was the fate of some to die 
beneath the tread of the passing people, but the survivors kept at their 
business with no apparent cessation or delay, and the advice seemed plain 
enough: u Go to the ant, thou sluggard, consider her ways," and be wise 
enough to go to work. Enter the vineyard in the morning and toil until 
night ; bear the burden and heat of the day with fortitude ; be thankful 
that the brain and muscle, which a kind providence has given you, can be 


put to good and everlasting use; consider the ant and her ways; keep right 
on in your work; take little or no time for meals; never waste the precious 
moment by talk with your neighbors, for is not the working ant a neuter, 
without sex, no family ties, no mating season; consider her ways and be 
wise; let your motto be business first, last, and all the time. The male ant 
lias wings and takes a "nuptial flight," accompanied by the female ant, 
also on wings, and after this short and happy example to the unemployed 
the male ant dies and the female ant founds a new colony of ants, a large 
percentage being neuters or workers. If the male sluggard considers the 
ant at the nuptial flight season it is quite likely he will think it wise to 
join forces with a congenial female sluggard. But at Merced I considered 
another matter— it was the average of chance in the destruction of the ant 
stepped upon by the passing throng. It was not only possible but probable 
that many of these ants worked all day on the path and escaped scot-free ; 
some were maimed, but still worked on, and the lesson I took was this : No 
matter what threatens, attend to your own affairs ; let the dread and doubt 
and fear, the apprehension and the borrowed trouble die in one grave. 
Give fair attention and honest measure to your employer, but also attend 
to the wants of body and mind, that health and temperance may follow you 
to a happy home. You will feel the iron heel which stamps you out of ex- 
istence all in due time, and perhaps it would be fair to twist the advice to 
read : Go to the ant, thou sluggard, consider her ways and be otherwise. 

GEO. F. GRANT, Editor. 


A well-known broker in a city not far distant, and whom we will call 
Long, for short, called upon a certain manager, who is known for his suavity 
of manner, and offered a line of insurance upon a "glucose factory," which 
risk was on the "prohibited list" of the aforesaid manager. The manager 
declined the risk, but the broker persisted, and said : "You know there is 
no 'moral hazard' in connection with this risk" — naming the gentleman 
connected with it. The manager said: "We are aware of that and our 
objection goes to the 'physical hazard.' " The broker replied : "I fear you 
are mistaken; have you ever inspected the property?" "No," said the 
manager, "but such risks are physically poor." "You are mistaken in 
this," said the broker, "for I have made a personal inspection of it, and you 
ought to see the great, big, strong men working there ; their arms were 
bare and their muscles stood out like whip-cords, and their broad chests 
and powerful limbs were superb. I never saw men better made physically. 
I am certain you would change your opinion about the 'physical hazard' if 
you could see these men." The manager smiled, but had strength enough 
left to decline the risk. 


A young and bashful special was called upon to adjust a loss on "female 

wearing apparel" belonging to a plump and pleasing young widow, as fair 

as a June apple, and whose well-turned foot reminded you of Trilby's. 

After taking down a list of opera cloaks, silk and satin dresses, dresses cut 


square on the bias and gored up the back, dresses high from the ground and 
low from the ceiling, he came at last to that which even the most hardened 
of our special agents return in their proof as "underwear;" but this poor, 
timid, bashful special (a vara avis to be sure) was aware of the necessity of 
having a complete list of everything, and so "corsets" and "chemises" 
were put down, and his voice weakened, for the lady looked daggers as he 
said: "Now, madam, I am nearly through; how many pairs of silk stock- 
ings did you say were damaged?" "Seven pairs, and they cost me $10.50 
per pair, and I can't wear them again." The price seemed an exaggeration 
to the special, although he remembered the McKin ley tariff had just gone 
into effect; so he said : "They come high, don't they?" "No," said the 
lady, fiercely; "not any higher than usual. I always wear nine long." 
This flabbergasted the young special, and he decided to finish the adjust- 
ment at once. So said, "Please let me see your stockings." "Sir," said 
the lady, "do you dare." This settled the special, but not the loss. Next 
day our plump and pleasing widow called at the office and told the manager 
that she had been insulted, that no unmarried man had the right to ask 
her such questions, smiling sweetly on the manager the while. He took 
the adjustment ints his own hands, paying more, I have been told, than if 
a valued policy law were in force. 

It was a small town, and he was young, but earnest, when appointed local 
agent. He soon mastered the rate book and insured his brother's stock. 
The brother strongly objected to the high rate and produced last year's 
policy. It was no use, rules are rules and the minimum rate book contained 
these words, 

Rate on building 1.60 

Rate on contents 1.80 

The total of these figures is 3.40, and the brother had to pay that rate, or 
fight — and he paid. 

One of our managers has a family of beautiful children. They were dis- 
cussing a gentleman friend at table, when the little daughter asked, 
"What is a bachelor?" "Ugh," said the little boy, "anybody knows that. 
A bachelor is a man whose wife does not wear a wedding ring." 

An earnest friend in a somewhat heated debate wound up his argument 
with the statement: "An underwriter is nothing more nor less than a 
human being." And that reminds me of a story. In the north end of town 
a little band of Christian workers have established a Sunday school, in the 
hope of bringing a little ray of softening intelligence to the minds of the 
"gamins" of that section. One day the question was put to the class: 
"What is a human being?" "I know," said the bright boy, " 'cause I seen 
one. " " Where did you see him ? " "At the circus. " " What was he doing 
there?" "He was in a cage." "A human being in a cage, what for?" 
"Showing off." "What was he doing in the cage?" "Oh, just smellin 1 


S >me years ago when President Watt was engaged in picking the stones 
out of his road to success his inquiring mind found so many queries that it 
became almost a necessity to put them on paper to classify them. In par- 
ticular, he wanted to know something about the machinery of a compact 
He could not reconcile theory and practice, and he asked several hundred 
questions through the medium of the Knapsack, which made a sensation in 
Local insurance circles and brought down thunders of eloquent dissent upon 
his devoted head. The Knapsack also was threatened with death by de- 
capitation. Time, the great healer, soothed the wounded, and the 
threatened calamity is now but an incident of the mouldy past. Mr. Watt 
took the wave at its flood and found his fortune. 

The Knapsack knew how to take a hint, and it made its serious articles 
over into funny items. And the compact ! Well, you know how it is your- 

The moral of this is obvious. No matter how young or inexperienced 
you are. no matter how low down on the ladder of fame, if you feel the fire 
of business desire within you, feed the flames until they burst out — then 
ask questions. 

Dear Knapsack :— 

Since leaving home on my present trip, our chief sent me a premium 
note for collection. On my arrival at assured" s town I secured a team and 
drove out to his ranch ; fortunately he was at home. I introduced myself 
and stated my business, but imagine my surprise to have him coolly say. 
**I owe you nothing, sir." The following colloquy then took place, viz. : 

"Did you not take out a policy of insurance in the Insur- 
ance Company last July (" 

"I did." 

"Did you retain that policy for several months ;*' 

"I did. but I had an agreement with the agent that I should have the 
privilege of canceling the policy at any time I wanted to. and when the wet 
weather came on I decided to carry my own risk, so returned the policy for 

• * You evidently never read the conditions of your policy or you would have 
known that your agreement with the agent was unnecessary, as you in 
common with all other policy holders have the right to cancel at any time 
you so elect. But you surely expect to pay the company for the time you 
held the policy :" 

••It was never that benefit to me" (snapping his finge: - 

"My dear sir. if you had suffered a loss by fire during the time you held 
the policy, would you not have looked to us for payment f" 

"Most assuredly I would, and under those circumstances I should have 
paid you the premium, but as the company has suffered no loss and the 
policy has been of no benefit to me. I owe you nothing." 

There he took his stand, and in fact stood me off. Nothing I could say 
had any effect on him. so I decided to t'each him a lesson : but to make sure 
of my position I first looked up the county records, and much to my sorrow I 
found that there was a method in his madness, for in September last he had 


transferred his property to his wife. Stood off again, and I am not happy 
yet, but I expect to be before I get through with the case. 

(Note.) The assured is an educated gentleman; at least he has that 
appearance, and has good use of the ''King's English," beside. How sad. 


The weary clerk looked up from his book, 

As the " Special " passed him by, 
And he gave the traveling man a look, 

And muttered, with a sigh: 
• How sleek and saucy he appears. 

How cheerful is his glance : 
Of creditors he has no fears, 

Who lead me such a dance. 
He thinks that he is fixed for life : 

Just wait and see me try, 
Til get his place without much strife : 

It will be mine, by and by. 

It will be mine, by and by, 

By and by : 
It will be mine, by and by. 
In just about two years. 
He will have cause for fears. 
It will be mine, by and by." 

The Manager sat in his easy chair, 

And pressed a little bell : 
The " Special'* tumbled through the air, 

And, hastening, nearly fell. 
The Manager said : " Now, take the train. 

And travel for a year, 
Whether*in sunshine or in rain, 

And let good work appear."* 
The "Special" started on his way, 

With a satchel in each hand. 
And as he traveled, day by day, 

In obedience to command, 
He thought : ;; He seems to have a cinch. 

His job is very fine : 
But wait until he gets the 'pinch.' 

And then it will be mine. 

It will be mine, by and by. 

By and by: • 

It will be mine by and by. 
I'll be quiet for awhile. 
But, pretty soon, I'll smile, 
It will be mine, by and by." 

The Death Angel paused in his flight o'er the town. 

With a gloomy air and severe, 
And, as he marked his victims down, 

He said, with a ghastly sneer : 


■ Its really funny to hear them talk, 

And scheme for each other's place. 
While I am ready the plans to balk 

Of all the human race. 
An insect has more sense than they. 

As it nutters in the sun. 
For it enjoys each warming ray. 

And their worry is never done. 

They will be mine, by and by. 

By and by : 
They will be mine, by and by : 
I will shut off their breath." 
Said the Angel of Death. 

" They will be mine, by and by." 

T met a local agent who represented our worthy President in an Oregon 
town, said he : "I am surprised to find that my manager, far from being the 
strict churchman I had supposed, is no better than he should be : why. he is 
actually profane in correspondence, and that I hold to be inexcusable." I 
stopped him and demanded proof. The letter ran something like this : " We 
feel that it is high time to hear from your agency. We find on looking over 

the expiration book that we have not had a D R from you in three 

months." This worldly agent had construed the D to mean dash and the H 

From various sources the following has been sent in. but as no two stories 
are quite alike I take the liberty of an original version : 

One day a telegraph boy brought a dispatch from a remote region, reading. 
** Large losses here cause general congratulations: your office has twelve 
thousand total." Well, I thought that is candid, to say the least. I know 
times are hard and business dull: I also have a feeling of uneasiness about 
incendiarism, and from the tone of the agent's letters heretofore I somehow 
felt lack of confidence, but this bare-faced exultation over the prospect of a 
cash sale to insurance companies is carrying bad practices quite too far. It 
transpired in due time that an error had been made in transmitting the 
message which was intended to read. "Large losses here cause general 
conflagration." etc. 

A bright young agent who hails from the Garden City thought the com- 
pact ought not io charge for a cement chimney which was not in actual use. 
His erudite*and '* strictly in line " manager told him the charge must be 
made: that as long as the chimney remained, even if it were not in use a 
charge should be made, and that the only way to obtain a reduction would 
be to remove the chimney. Nothing daunted this bold but smooth-faced 
youth, whose smile reminds you of your best girl, would not have it. so he 
wrote out the following endorsement : " Warranted by the assured that the 
cement chimnej* will only be used during the life of the policy for ventilation 
pur pose*." The aforesaid manager, who loves a joke, sent the endorsement 
to the compact — and it passed. 



Bit He Is Thankful Hi* Little Home Was Not Insured. 

Klamath Star. 
Saturday evening the pretty white cottage belonging to the editor of 
this paper was consumed by fire, together with everything it contained, 
save a bed and a few articles of clothing. We had started a fire in the 
kitchen stove and gone down town, leaving the house temporarily without 
an occupant. The wood-box caught fire and soon the building was a mass of 
flame and smoke. The house was not insured, and our loss is about $900 
altogether. To us the fact that we were not insured is gratifying. That 
fapt quietly rakes away from our burned threshold the odium of a suspicion 
whose brand would have been a much heavier misfortune than the loss of a 
few hundred dollars. We have been over twelve years in Oregon, and are 
well known among the newspaper fraternity of the state. Our brethren of 
the press, also our citizens in Klamath, will cheerfully acknowledge that 
thus far our conduct has been kept pretty clear of offensiveness. Had the 
house been insured, however, the circumstantial evidence against us would 
have been damning, and an innocent man would have been doomed to bear 
for life the brand of a criminal who burned his residence to rob an insur- 
ance company. Thank God that we escaped that misfortune, anyhow ! 


If I should die to-night 
And you should come to my cold corpse and say, 
Weary and heartsick o'er my lifeless clay; 

If I should die to-night 
And you should come in deepest grief and woe. 
And say, " Here's that ten dollars that I owe." 
I might arise in my large white cravat 
And say, " What's that r" 

If I should die to-night 
And you should come to my cold corpse and kneel, 
Clasping my bier to show the grief you feel ; 

I say if I should die to-night. 
And you should come to me there and then, 
Just even hint 'bout paying me that ten, 
I might arise the while, 
But I'd drop dead again. 


The postman was late, and was running along. 
To gather the letters in time, 

When he heard a gruff voice like a bull-frog's song, 
Or a mellow-toned cow-bell's chime. 

Chorus :— 

" Wait, Mister Postman, don't hurry so fast, 
Wait, Mister Postman, I've caught you at last : 


This letter must go in the mail before two, 
So our Oakland agent will know what to do. 
Wait, Mister Postman, please bend down your head. 
Wait, Mister Postman, the Compact's not dead: 
Wait, Mister Postman, for heaven's sake wait, 
Or he'll give us more risks at a deep cut rate." 


Some say special work is hard and that experience is necessary for sue- 
in that line. I made my first trip last week, wrote up some new busi- 
ness, adjusted a loss and found it easy. I suppose there is a difference in 
men, but I'm a student. I've read the rate books from One to Four, and all 
of the Pacific Insurance Union circulars, including those that didn't go. I 
know "Lowden's" Adjustment of Book Losses by heart, and have studied 
the Kinne Rule over and over, but O ! I hope I will never have to adjust a 
loss where the policies don't read alike. If there's anything in Tiffany. 
Griswold or Hine I'm not posted on, it must be in later editions than mine. 
I've even read the Otey Manual clear through, including the dedication 
and diagrams. So, when the manager called me up from the supply depart- 
ment and started me on a special trip, I was sure I'd succeed because I had 
the theory down fine and all I had to do was to apply it. I didn't travel 
far, but I may go out again next summer and stay longer. 

First I went to Elko, arriving there January 3. Agent Jones gave me 
£2,000 on the "Diamond Hotel." On the fifth the hotel burned. That was 
too bad, for it set a splendid table. I don't know why they did not get 
me to adjust that loss. 

Then I went to Be-owa-we and took the stage for Weeping Water station, 
30 miles west. There I appointed J. Wesley Ferguson agent. He is also 
postmaster, justice of the peace, notary public, stage agent, express agent, 
and has a cattle range of 3,700 acres near the station. I insured his dwell- 
ing house and showed him how to make the rate under Book 4. 

"First," I said, "the basis is seventy-five cents." 

"As low as that?" asked the new agent. 

"Yes; but that's on each hundred dollars, you know." 

"All right," said Ferguson. 

"Then for deficiencies we add seventy-five cents." 

"What's that for?" 

"Isn't there an old silk hat stuck through a broken window upstairs?" 


" Well, you can see by the book that we have to charge seventy-five 
cents for a stovepipe through the side, window or roof." 

"Correct," said Ferguson. 

"Now for the exposure charges." 

"The dwelling stands alone," said the agent; "there's no other building 
nearer than two miies east, where I have a wooden house occupied by the 
men at the round-up station, and west three miles I have a cattle barn." 

"Hold on," said I, pleasantly; "we must go by the book. For frame 
dwelling house situate two miles east of said dwelling, on said ranch, 


fifty cents, and for frame private barn situate on said ranch three miles 
west, fifty cents.'' 

"Are they exposures when they are so far away?" asked the agent. 

"Well," I answered ; "to be fair and square with you, I don't think them 
very dangerous, even in a strong wind, but we have to charge for them 
just the same, for the rule says: 'Charge for every other building in the 

"That's all right," said Ferguson. "I see you know your business." 

"Any objections to my adding the 'adjuster's clause' '?" I asked. 

"No," he replied, "everything goes. You're pretty good on addition, old 
man; add anything you want." 

So I wrote $2,000 on his dwelling for five years, annual rate two and a 
half, term rate seven and a half, premium $150, and then went to Reno, 
where I made my first adjustment. The policy covered $500 on a frame 
dwelling house, $300 on household furniture and $200 on one violin. 

The assured was a professional musician, well known in Reno, a dis- 
tinguished violinist, and appeared to be a man of superior education. 
Everything checked up all right until I came to the violin. 

"Professor," I said, "that must have been a fine fiddle of yours to have 
had $200 insurance on it. Where did you buy it ?" 

"It was left me by my father," he replied, and the tears came to his 
eyes. "It had been in our family for many years." 

When he said this I knew I had him, but I never changed countenance, 
and continued : "What did you value it at?" 

"It was priceless. I refused $4,000 for it. It was insured for a trifling 
sum, for I never expected a fire." 

"What make was it ?" 

"A genuine Stradivarius, and was inscribed 'Antonius Stradivarius 
Paciebat, Cremona, 1771'." 

"Who was Faciebat?" I asked, "One of the firm?*' 

He looked at me wearily and answered, "Faciebat is Latin for 'he made 
it.' The violin was made by the great Stradivarius at Cremona, Italy, in 

"In 1771 and this is 1895. Then it was a hundred and twenty-four years 
old, and we supposed we were insuring a new, first-class violin. Of course 
you don't make any claim on that item, professor?" 

"Why not?" 

"Look here," said I; "See what Tiffany says;" and I pulled the book on 
him. "Musical instruments depreciate annually 5 per cent. You can fig- 
ure the depreciation yourself, professor. A hundred and twenty-four years 
at five per cent, a year leaves no value, and Griswold says : ' Where 
there's no value there's no liability'." 

"But — " said the professor. 

"Tiffany," said I— 

"D — n your Tiffany and Griswold, too," said the professor; "was there 
ever such an idiot?" 

"Do you mean me ?" said I. 

"Never mind, sir," he replied, "I'll write to the company." 


•• Very well," I answered, and left him. But I never understood why 
the company finally paid him a total loss. 



Not Allowed to be Sung In San Francisco. 

There was once a simple agent came to "Frisco on a trip. 
When the Compact rates were split right up the hack: 
His cheek was still unhardened. he'd a smile upon his lip. 
Though the Compact rates were split right up the hack. 
When he landed at the ferry he took a little stroll. 
And he met a nervous manager who had lost his self control : 
Said he : " The news is awful. Why, bless your verdant soul. 
The Compact rates are split right up the back.** 

But, oh dear, he doesn't look the same : 

When he left Milpitas he was shy. 
But alas, and alack, he's gone back 
With a naughty little twinkle in his eye. 

He walked up town with a twist upon his face. 

For the Compact rates were split right up the back : 

It was hard to hold his morals in their customary place. 

For the Compact rates were split right up the back. 

Of course he knew his manners, he'd been taught to be polite. 

So when asked, " Hem, cut rates?"' he said. " Hem, all right. 

I'm a stranger in the city, but at home I'll try to fight. 

While the Compact rates are split right up the back.'" 

He took his arm in confidence, he liked his pleasant ways. 
While the Compact rates were split right up the back: 
And as he passed the offices he stared in great amaze, 
For the Compact rates were split right up the back. 
He asked on what the cut would go, the answer was " good biz,' 
Then he took him into Collins' and treated him to fizz : 
Said he, " I think it's nicer than a glass of milk, it is, 
Though the Compact rates were split right up the back." 

They drank until the artless man so very weary grew. 
While the Compact rates were split right up the back: 
That a six per centum rate was dwindled down to two. 
For the Compact rates were split right up the back. 
Then silently he left the town and took the evening train 
And wrote up hay barns at a rate that gave the office pain. 
Said he, '• They'll never catch me with their Compact again. 
For the Compact rates are split right up the back." ' 

But, oh dear, he doesn't act the same: 

When he left Milpitas he was shy, 
But alas, and alack, he went back 

With a naughty little twinkle in his eye. 



John Doe, Manager: 

Dear Sir : I, for one, am truly glad that the "American Eagle " has done 
as well as she has for 1894 and 1895. I expect to double the business of 1894 
unless the bottom drops clear out. I am determined to make an insurance 
man out of myself, and have got to make a record during 1895. 

When I took hold of the "American Eagle " here people were not familiar 
with the name, but now nearly everybody wants an "American Eagle" 
calendar, and by January 1, 1896, I expect everybody in the city to be better 
acquainted with the company and particularly with the name "American 
Eagle Insurance Co. ' ' 

I am not an extra solicitor in the town, but I can work the farmer to a 
good advantage, and if the "American Eagle" should, at any time, make 
up her mind to make a specialty of farm business, I wish you would give me 
a chance at it. There is many a good risk in the country, and I believe I 
could double the "American Eagle's" business in the Eden Valley by 
appointing agents in different places and staying with them and canvassing 
the whole country. 

In the first place I would have me a rig made to order. The gear should 
be red as fire and the body white as snow, with the words "American Eagle 
Insurance Company " in large bright letters on the sides of the body, and as 
for the horse, I already have him, and for style and good looks he cannot be 
beaten on the Coast. The idea of this would be to attract attention, as $250 
spent in this way would do more good than $1,000 in newspaper advertising. 

In regard to those companies drawing out of the Union, it looks very 
much to me like they intended to cut rates. If not, why did they draw out ? 
I sincerely hope that they w^ill maintain Union rates, but I am afraid they 
will not. I heard a man say to-day that he held a mortgage on a certain 
house in town, and that the rate was $1.50 per annum, that the policy would 
expire in June, and that he would not have to pay over two-thirds as much 
to have it renewed. The way he talked he must have been talking to some 
insurance agent. Will look into and investigate fullj 7 and write you. 
Yours truly, 

(Signed) Joshua Whitcomb. 


February 5th, 1895. 
Mr. Joshua Whitcomb, Resident Agent, Eden Valley, Cal. : 

Dear Sir : I have your esteemed favor of January 2d, in reference to the 
general situation. I am particularly pleased to know that the American 
Eagle has been well received in Eden Valley, and that you hope to transact 
a large and prosperous business for us during the current year. 

Our own experience is that the American Eagle calendars are largely in 
demand, in fact more largely than American Eagle policies. Unfortunately 
calendars, unless followed by policies, do not yield income. It is only the 
policies issued which furnish us with our daily bread and enough money to 
pay the expenses of the office, the taxes and the dividends to the owners of 
the capital stock. 


I note your remarks in reference to farm property and your plan backed 
up by your enthusiasm will doubtless yield very handsome results. The 
company does not, however, particularly fancy farm property, and I do not 
think it likely that they will go into that business for some time to come, 
if at all. 

The picture you draw of the rig in which you would travel is, to say the 
least, graphic iin d as an advertising scheme would surpass anything on the 
Coast. Our fellow-citizen, Dr. C. C. O'Donnell, heretofore candidate for all 
the offices on the city ticket from Poundkeeper to Mayor, during the last 
campaign hired an express wagon, had it covered with canvas, which he 
decorated with startling inscriptions; he then purchased an orchestrian, 
hired a small boy to turn the crank, mounted the front seat and was driven 
from place to place in the densely populated parts of the city : wherever this 
vehicle stopped crowds of people gathered, and then the doctor standing on 
the seat of the rig, delivered his address and made his unlimited promises. 

It occurs to me that this company for farm business might be able to 
employ the doctor with his wagon, orchestrian and small boy to follow in a 
procession in which your rig would be the leading attraction. From time to 
time, as you reached small centers of population, you could stop the proces- 
sion, start the music, give them an address by the doctor, and then mount- 
ing the front seat yourself explain to the gaping crowd the merits of the 
American Eagle policies. 

Experience goes to prove that if you want to interest the parents you 
must interest the children, so it might be well to add to our procession a 
third wagon containing a •' Punch and Judy" show. Usually such enter- 
tainments have to be paid for, but we could say that the show was given 
simply to draw attention to the great strength and broad policy of the 
American Eagle Insurance Company. 

In fact your letter opens up to our mind methods of advertising which 
would no doubt be valuable and which might be of great benefit to our com- 
pany. Let us think it out further and if the company ever goes into farm 
business we will adopt this method and teach the other managers and agents 
how to do it. 

Wishing you success, and hoping to hear from you in the near future. 
I am, 

Yours very truly, 


I hope I am not over confident of my own power of discernment, and no 
one has ever accused me of undue egotism, but I feel sure if I were not a 
special agent I would be a detective. I pride myself on my knowledge of 
human nature and my ability to see the motives of men at a glance. This 
was in a measure demonstrated at the large fire at Traver, and I have given 
the subject of one particular loss a good deal of thought since then, and I 
think I have gained knowledge of great value both to a special and a detec- 
tive. The facts are these : One night, or rather morning, for it was about 
two o'clock a. m., after a long sitting with a claimant I went into the cool 


air for the purpose of refreshing myself preparatory to sleep. I was drowsily 
smoking, when all at once I saw a dark shadow moving along the street in a 
noiseless and apparently stealthy way. With equal caution I followed ; it 
proved to be a man, and he went with great care and precision to the rear 
of a building situated on the outer edge of the burned district, let himself 
into the back door by means of a key, fastened the door, lighted a candle 
and with deliberate action put a pile of rags in the middle of the floor, poured 
kerosene over them from a convenient can, and applied a match. I saw the 
flames burst forth, and waiting to see no more I ran at once to the home of 
the Town Marshal; awakening that official I quickly told the story, then 
hastened to the bedside of a few trusty adjusters, arousing them also to 
action. With much discretion we surrounded the store where the fire had 
been started. Through the shutters we could still see the form of the incen- 
diary feeding the flames. The marshal had no difficulty in recognizing the 
man as Alex. Wollenslagger, of the firm of Dagger & Wollenslagger, and it 
was well known they were claimants by the recent loss. After a council of 
war, so to speak, the marshal beat a loud tattoo on the front door, at the 

same time calling upon the incendiary by name to come out, and be d d 

to him. This had the desired effect, and Wollenslagger came forth. He was 
the coolest villain I thought I had ever seen. He had the obsequious air of a 
counter-jumper, and the accent which is a dead-give-away. He invited us 
inside with much apparent hospitality, and his eye never blinked nor did his 
color once change. This, thought I, is the most hardened scoundrel ever 
caught red-handed. Finally, the marshal recovered from his temporary 
stupor and made his arrest, naming all the damaging evidence in our 
possession and the eye witnesses to the crime. "That is all right," said 
Wollenslagger, "I settles my loss with the Royal Insurance Company yes- 
terday, and I gets ready for a schmoke damage and a cash sale to-morrow." 
The adjuster of the Royal was still in town and confirmed Wollenslagger' s 
story. The smoke was an after thought to influence trade. 

The President — I am sure, gentlemen, we are again placed under 
deep obligations to Mr. Grant for the Knapsack. It has been pre- 
pared, as he intimated, amidst extraordinary labors attendant upon 
the reorganization of the Board of Fire Underwriters, and is as 
meaty, as pleasant and witty as ever before. We appreciate it very 
highly, we assure you Mr. Editor, and thank you for it. Is there 
any other business, gentlemen ? 

The Secretary — The election of the election committee. 

The President — Will you nominate, Mr. Secretary. 

The Secretary — Mr. President, if you will pardon me just a mo- 
ment. There are some circulars here for distribution, sent over by 


Mr. Mallett of the Norwich Union, regarding the subject of classi- 
fication. I received a letter from him asking that these be placed on 
the table subject to examination, and take pleasure in complying. 
The books are two guineas each. 

Mr. Driffield — Do you know whether these books have reference 
to the classification of English business exclusively ? 

Mr. Folger — I will say that Mr. Mallett has sent me, presumably 
because I have been chairman of the library committee, a copy of 
this work, which was marked "complimentary. " and which I shall 
be very glad to place in the library of the Association. In answer 
to Mr. Driffield: It is a general work, printed, I fancy, at the Nor- 
wich Union fire office out of compliment to their assistant, who is in 
charge of the classification department, and is based upon the ex- 
perience of the Norwich company. 

The President — I have not seen the book or the circulars. It will 
probably be especially interesting to managers rather than to the 
members of the Association. We will now hear nominations for 
election committee. 

The Secretary — Mr. Driffield suggested them, and I thought he 
would place them in nomination. The names are: W. H. Lowden. 
H. M. Grant', A. G. Dugan, F. G. Argall, F. J. Devlin. B. C. Dick. 
H. A. Craig, A. R. Grim, Geo. F. Grant, H. Danker, Geo. D. Dor- 
nin, D. B. Wilson, R. W. Osborn, R. V. Watt, and W. B. Hopkins. 
I will place them in nomination, Mr. President. 

Mr. Driffield — Second the motion. 

The President — Are you ready for the question? All who favor 
the election of these parties for the election committee will signify it 
by saying aye. Contrary, no. Carried. 

Mr. Edwards — I think it is necessary to elect by ballot, and I 
would move that the Secretary be instructed to cast the ballot. 

The President — You have heard the motion. All who will favor 
this motion signify by saying aye. Contrary, no. Carried. It is 
so ordered. 

The Secretary casts the ballot. 


The President — Has any member any other business to present to 
the Association before we adjourn. Having none, I desire to say, 
gentlemen, that I have been highly mindful of the honor conferred 
upon me in my election as President of this Association. I have 
received at your hands uniform courtesy. If I have any fault to find 
it is that so many refused to respond to my appeals for articles for 
this meeting, and some who agreed to contribute papers afterwards 
failed to do so. I think I should mention the resolution which was 
adopted on the first day of this meeting inflicting a fine of fifty 
dollars upon any member failing to present a paper hereafter when 
invited, when such member has never contributed. I am sorry that 
resolution was not put in operation earlier. Had it been I would 
have had a programme occupying three days. I appreciate, how- 
ever, very highly all your kindness to me, assuring you that this 
will always be regarded as one of the most important and interesting 
years of my life. I again thank you for the honor. (Applause.) 
If there is no further business, a motion to adjourn will be in order. 

Mr. Folger — Will you be kind enough, for the information of 
those living out of the city, to give the location of the Delmonico, 
where the dinner is to be given? 

The President — It is No. no O'Farrell street, north side, west of 
Stockton. The dinner hour is fixed at 6:30, but it will probably not 
be served until 7. We expect to have present with us Mr. J. J. 
Purcell, Assistant United States Manager of the Sun Fire Office, 
besides a large number of our own members, insurance men of this 
city, and visitors from north, east and south. I do not know of 
anybody from the west, unless it be our friend Mr. Folger, who repre- 
sents western interests. Is there anything further, gentlemen ? 

Upon motion, the Nineteenth Annual Meeting of the Fire Under- 
writers' Association of the Pacific was declared adjourned. 


The Annual Banquet. 

The year closing with the largest enrolled membership as well as 
the Largest cash balance of any during the life of the Association 
was fittingly terminated by a dinner, on Wednesday evening. Feb- 
ruary 20. 1895. at the new Del Monico, and was among the first large 
dinners given in the beautifully and completely appointed banquet 
hall of this popular establishment. 

As usual the dinner committee consisted of Mr. Geo. W. Spencer 
and Mr. Geo. F. Grant. Everything was arranged in excellent taste, 
and these gentlemen surpassed themselves in their attention to the 
perfection of every detail. 

The banquet board was laid in the form of a horse shoe, extending 
around three sides of the hall. The scene was brilliant, incandescent 
lamps, cut glass, beautiful flowers, and happy faces combining to 
make a picture long to be remembered. 

The menu was as follows: 
Sautcrne Eastern Oysters on the Half Shell 


Chateau Mont Rouge Consomme a la Royale 

Relishes : 

Shrimp Salad Mayonnaise Caviar Russe sur Canape 

Olives Farcies Saucisson de Lyon 


Turban of English Sole a la Hollandaise 

Pommes Duchesse 

Releve : 

Zinfandel Fillet of Beef, a la Portugoise 


Entres : 

Supreme de Volaille aux Truffes 

Vegetables : 

Asparagus en Brances Artichokes a la Barigaule 

Sorbet : 

Maraschino Punch 

Roast : 

Squabs a la Casserole, Lettuce Salad 

Entremets : 

Champagne Croute a 1' ananas Bombeglaice Panachee 

Assorted Cakes Fruit Cafe Noir 



Following is a list of the members and guests who partook of the 

John Andrew 
J. H. Anhele 
W. H. Bagley 
Franklin Bangs 
Philip S. Bates 
Geo. C. Boardman 
Geo. W. Brooks 
Arthur M. Brown 
R. G. Brush 
Edwin H. Bacon 

E. W. Carpenter 
J. W. G. Cofran 
J. G. Conrad 
Homer A. Craig 
H. Danker 
Charles Dickman 

F. J. Devlin 
George D. Dornin 
V. Carus Driffield 

A. S. Dugan 
Wm. J. Dutton 
L. B. Edwards 

F. C. Farnura 
Jno. T. Fog arty 
Wm. H. Friend 
Herbert Folger 
Wm. H. Gibbons 
Calvert Meade 
R. C. Medcraft 
Geo. H. Mendell, Jr. 

G. Messinger 
R. W. Osborn 
Chas. T. Parker 
Wm. Reed 

R. R. Roper 
Guy H. Salisbury 
L. M. Seaton 

B. D. Smalley 

C. W. Smith 
Roderick Smith 
Sidney H. Smith 

James E. Graham 
H. M. Grant 
Geo. F. Grant 
Tom C. Grant 
A. R. Grim 
A. R. Gunnison 
E. F. Gutschow 
Wm. G. Haitz 

E. P. Hanks 
M. C. Harrison 
Rudolph Herold 
Charles B. Hill 
William H. Hill 
W. B. Hopkins 

F. L. Hunter 
R. D. Hunter 
Franz Jacoby 
N. T. James 
F. B. Kellam 

C. Mason Kinne 
L. F. Lamping 
Wm. H. Lowden 
Wm. Macdonald 
Wm. Maris 

W. A. Mathews 
J. D. Maxwell 
J. W. McKowen 

D. A. Spencer 
Geo. W. Spencer 
D. J. Staples 

R. F. Stewart 
Chas. R. Thompson 
Charles F. Towe 
Geo. W. Turner 
Geo. H. Tyson 
J. S. Watson 
Rolla V. Watt 
Louis Weinmann 
John Scott Wilson 
W. C. Wollev 

The Association was also honored by the presence of Mr. J. J. 
Purcell of New York. Assistant United States Manager of the Sun 
Fire Office of London. 


Mr. Rolla V. Watt, the retiring President, followed the time hon- 
ored custom of presiding at the feast, and occupied a seat at the head 
of the table, with his successor, V. Carus Driffield, President-elect 
at his right, and Herbert Folger, Vice-President elect, at his left. 

During the progress of the dinner telegrams were received from 
A. A. Andre and Tudor Tiedemann at Antioch, and from fifteen 
members and friends of the Association who held a banquet simultan- 
eously at the Hotel Portland, Portland, Oregon. The Portland 
'•contingent'' were: Bernard Faymonville (in the chair), Geo. F. 
Ashton, W. F. Chalmers, J. D. Coleman, R. P. Fabj, J. L. Fuller. 
A. F. Gartner, M. J. Green, Ed. Hall. A. Herman. E. T. Niebling, H. 
E. Parkhurst, H. Smith, Sam B. Stoy, J. H. de Veuve. 

An animated after-dinner conversation was interrupted by some 
well-chosen words from the President, who suggested that mem- 
bers of the Association were like "minute men." ready to move at 
the word of command and without previous notice, and should 
promptly respond when called upon for "remarks." 

No program had been arranged, except as to music, but natur- 
ally the first speaker called upon was Mr. Driffield. President- 
elect. Mr. D., upon arising, was met with storms of applause and 
the cries of "He's all right, every time." He then proceeded to 
thank the gentlemen for the honor conferred upon him by his elec- 
tion to the presidency of the Association, and promised the best ad- 
ministration of which he was capable. Vice-President Folger was 
next called, and disclaimed any feeling of personal pride in his elec- 
tion, believing that he had been chosen out of compliment to the 
Northwest representatives in the Association. Mr. Louis Wein- 
mann, Secretary and Treasurer elect, then responded to the Presi- 
dent's call, paid a high compliment to his predecessor, and thanked 
the Association for the honor conferred. Ex-Secretary Osborn, who 
had been elected chairman of the executive committee during the 
session, was next called upon, and spoke eloquently of the objects 
and attainments of the Association. We take the liberty of quot- 
ing from The Coast Review the proceedings from this point: 

L. B. Edwards referred to the new faces. There are now nearly 200 
members of the Association, while originally, for a long time, there were 


only forty or fifty. E. W. Carpenter, who had been made an honorary 
member, sang a topical song, in the chorus of which everybody joined. Mr. 
Carpenter became a member sixteen years ago. D. J. Staples responded 
to Mr. Watt's request, with a few remarks beginning, "My boys," but 
he was not " the father," he said. That honor belonged to Geo. C. Board- 
man, the oldest man in the business in this field. Mr. Staples believed in 
the Fire Underwriters' Association, he said, and had always encouraged it. 
The Association was an honor to the profession. Frank J. Devlin spoke of 
character and its influence on the future of young men. Geo. C. Board- 
man, referred to as the senior underwriter, had a few words to say. Tom 
C. Grant met with uproarious applause when he proposed a bumper to the 
dinner committee. Mr. Medcraft sang a song, "I Need no Stars in Heaven 
to Guide Me," and nobody seemed to think that the title might have an 
application to the banqueters when they sought their homes. Mr. Watt 
formally thanked the dinner committee, and Geo. W. Spencer replied only 
too briefly. He had come there to enjoy himself, and that precluded a 
speech. Geo. F. Grant acknowledged that Mr. Spencer, his fellow commit- 
teeman, had done the most of the work. Mr. Grant then declared that, 
like every other banquet, this was the best, and like every other meeting 
the nineteenth was the best, etc. Wm. Macdonald took pleasure in saying 
that he was an applicant for membership in the Association, and promised 
to take an active interest in its affairs should he be elected. John Scott 
Wilson was of opinion that "we are overwriters now." D. A. Spencer was 
surprised and gratified at the thorough good fellowship manifest. All were 
friendly around that board, though they might scalp each other on the out- 
side. The insurance business, he said, was a personal one. John Conrad 
said there ought to be good fellowship, because there are interests in com- 
mon. The friendly spirit prevailing there should also be equally in evi- 
dence at board meetings. 

Mr. J. J. Purcell of New York expressed his pleasure at being present 
with and meeting the managers and field men of the Coast. He had for 
years "packed the grip" and understood the value of this branch of the 

A topical song by R. W. Osborn was sung by A. W. Brown, and every- 
body "caught on" to the chorus. Mr. Dickman told two good "broken Ger- 
man" stories excellently well. Then the presiding officer resumed calling 
on the "minute men." Rudolph Herold gave an account of the pleasant 
two weeks he spent in New York discussing the Pacific Coast expense 
ratio. A. G. Dugan seriously said "this is entirely unexpected," and was 
interrupted by cries of oh ! ah ! and "so say we all." Geo. D. Dornin briefly 
touched on "the situation" and ventured the opinion that the local agents 
have shown themselves more conservative than the managers. He thought 
the locals would hereafter have a better opinion of the compact, and would 
make fewer complaints. W. J. Dutton, too, had something to say of the ex- 
isting unpleasantness. He summarized the board members' pledge, and 
found in it good ground for a hopeful view. Other speakers were Messrs. 
Bates, Harrison, Seaton, Lowden, Kellam, Grim, Bagley, Smalley, Fogarty 
Gibbons and others. Then followed the "low jinks," 1 with John Scott Wil- 


son as most worthy sire. There was an entertaining bit of by-play, and 
several good stories, rich and reminiscential, were told. 

The underwriters' trio, composed of Messrs. Hopkins. Dick man 
and Graham, favored the company with a number of excellent songs 
during the evening, and on each occasion were loudly applauded. 

x\fter a thoroughly enjoyable evening the banquet was brought 
to a close, and the handsome program and menu card, the cover of 
which was designed by Mr. F. B. Kellam, was carried away by those 
in attendance as a souvenir of a delightful occasion. 

Mr. Carpenter's topical song was as follows: 


As Sung by E. W. Cakpenter. 

[A very much resigned ex-company manager] 

The world is full of people who are always on the bluff, 

And you meet them— ev'ry where. 
In our underwriting business we've found many that are tough. 

Hardly ever — on the square. 
I had an old time customer whose rate was boosted higher: 

He "kicked" and said insurance was "no good." 
I jokingly suggested he could square accounts by fire : 

To tell the truth I didn't think he would. 

Chorus : 

I didn't think he'd do it, but he did, did, did: 
He said he always knew it, and he did. 
He beat me " by a scratch," 
With his auburn-headed match; 
I didn't think he'd do it, but he did. 

Though proof was really lacking, I accused him of the crime. 

Said I'd land him— in the jail, 
And I quoted court decisions from the early English time, 

In a way that — made him quail, 
But finally suggested that I might not prosecute, 

So full of human kindness was my mood. 
If for one dollar full receipt he'd promptly execute ; 

To tell the truth, I didn't think he would. 

Chorus : 

I didn't think he'd do it, but he did, did, did; 

He wanted to get through it, and he did. 

He took his dollar bright 

Then briskly skipped from sight. 

I didn't think he'd do it, but he did. 


I trembling, took the policies, was paralyzed with joy, 

But recovered— very quick, 
When claimant's many creditors quite promptly did employ 

An attorney — smart and slick, 
Who " intimidation" hinted at, and prison bars "to boot." 

Claimed total loss in manner very rude. 
I told him Td receipts in full— he'd better bring his suit : 

To tell the truth, I didn't think he would. 

Chorus : 

I didn't think he'd do it, but he did, did, did : 
He told me that I'd rue it, and I did. 
On the judge he "had the call," 
Made me pay claim, costs and all. 
I didn't think he'd do it, but he did. 

Now episodes like this one detract sadly from the bliss 

Underwriters— all desire. 
But when thereto, through faithless fraud, large loads of acts remiss, 

Are by themselves piled higher, 
I was so much disgusted that I couldn't help but tell 

(In vernacular so plainly understood), 

My offices I "guessed" I'd quit— the "biz" could go to * 

{Spoken) Well, 

Of course, you know I didn't think it would. 

Chorus : 

From present point of view, it seems it did, did, did; 

For something happened to it, yes there did. 

But where going to or gone 

Is too deep a thought for song. 

I didn't think 'twould do it, but it did. 
*Considering the present unsettled condition of insurance affairs on this Coast (to which, as 
a whole, and not to the "biz" of any particular office, reference is here made) the writer 
would not hazard a suggestion as to the locality, and the reader can (of rhyme regardless) 
supply the omission in accordance with his idea of the situation as seen from his individual 
point of view. 

Mr. Osborn's topical song- was as follows: 


By R. W. Osbokx, as Sung by A. M. Brown. 

(With apologies to "The Bogie Man.") 

Come, listen to my song to-night, you underwriters all, 
I'll tell you 'bout the naughty man, who's bound to have his fall — 
He joins the P. I. U., he does, the rules and laws he'll scan, 
But he'll not keep to anything, this very naughty man. 

Chorus : 

Fie ! Fie ! Fie ! Oh, what a naughty man, 

To join the P. I. U. and promise everything he can ; 

Just look there, and quickly his face scan, 

And tell me if you'd think him such an awful naughty man. 


Be goes into the street forthwith, a broker for to catch. 
And offers twenty-five, but finds the other quite his match: 
He offers thirty, thirty-five, the limit of his plan— 
Another takes the broker from this very naughty man. 


The next step is the country, there an agent for to get, 
He'll not stop short of twenty-five or thirty, you can bet : 
To drop or shelve the other one is usually his plan. 
You can't find out so very much about this naughty man. 

Then comes disruption, threatened so. to all along the line. 
The organization fails to cash a solitary fine: 
So daily do the members meet to formulate a plan. 
To check the work and damage of this very naughty man. 

Then one his resignation sends, in hopes to bear good fruit, 
When, within a week or two. so many follow suit : 
The war gets warm, and each man sweats, some needing much a fan. 
And on account the crooked ways of this very naughty man. 

The new Board forms and to the sea each Underwriter went. 
To discuss the ways and means, the naughty things we must prevent ; 
When they returned, quite full of joy at a perfected plan, 
They bid good-bye to tricks and works of this very naughty man. 
Chorus : 

later. [possibly a little premature.] 
The war is fully over and we are all into line, 
New hope springs up, bad faith no more, for all is looking fine : 
Each man has to his senses come, and every face you scan 
So clearly shows from this time on there is no naughty man. 

Chorus : 

Ha ! ha ! ha ! each is a goody man, 

To join hands with the rest of us to do the good he can : 

Ha ! ha ! ha ! just try each face to scan, 

And it will be impossible to find a naughty man. 


Matters of Interest During the year. 

Delivered at a Reception of the Clerks' Association by the Board of 

F. U. A. P. 
To the President, Members and Guests of the Association : 

I was requested a week ago to give you to-night my ideas of " The Value 
of Insurance Literature," and I won't begin by saying that I have given the 
subject no thought, for I have thought of it a great deal. However, I may 
have some trouble in conveying those ideas to you briefly and coherently, 
for writing papers has never been my forte. 

The value of insurance literature should and must appeal to all thinking 
men in our profession and by all who expect to succeed in the insurance 
business. The events and thoughts of past decades form the precedents 
and the rule of action of to-day. Just so will our actions and experiences of 
to-day constitute precedents for the guidance of those engaged in the busi- 
ness twenty years hence. 

Those of us who expect to succeed in the insurance business must bene- 
fit by the experience of underwriters in the past and in the present, and 
while benefiting by such experience, must act in the present so that our 
actions may constitute safe and reliable precedents for those who are to 
follow us in the future. 

There is no business or profession in the world which is so dependent 
upon precedents and past experiences as is the insurance business. Our 
business is one of probabilities, and how can we expect to gauge the prob- 
abilities of the present and future more safely than by observing the ex- 
periences of the past. 

Now, how are we to gather up the threads of past experiences and 
weave them into the events of the present except through insurance 
literature. Is it not a fact that our whole success depends upon our ability 
to benefit by past and present experiences in the business, and is it not 
also a fact that insurance publications and insurance literature is the one 
great channel aside from personal observation through which these exper- 
iences can be gathered together? Looking at it in that light am I not war- 
ranted in saying that insurance literature is one of the most important, if 
not the most important, adjunct to our business? 

Referring more particularly to the different kinds of insurance literature 
at hand we have : 

First, the policy which contains the crystalized results of thought, ob- 
servation and experience of insurance and legal minds in our business. 
How many of you have ever thought to read and study the terms of an in- 
surance policy carefully ? 

Next we have the insurance journals which give us a transient record of 
current experiences, opinions, observations, and a reflection of the thoughts 
of the day. These journals are pioneers of the frontier of the insurance 
world; they are the recorders of the events and experiences which will in 
time pass into history and serve as mile-stones and guides for those who 
may in future travel the insurance path. 


Next we have the law books, text books and statistical works, which are 
the permanent records of past events properly sifted and arranged for ref- 
erence and instruction. 

All these classes are exceedingly important to the underwriter and to 
those who expect to follow r insurance as a profession. 

[f you were to ask me which you had better read first, I should un- 
hesitatingly say, read and study the terms of policies in current use. and 
then read the insurance journals, and through them keep abreast of the 
t imes and observe the changes which are continually being worked in the 
insurance world, for the events and occurrences of the present will have a 
marked influence upon your actions in the future. If you have any time to 
spare after you have read the policy blanks and the insurance journals. 
then try to round out your knowledge of the business by a study of the 
published standard insurance books, which as before stated, contain a per- 
manent record of the events that are past. If you should be fortunate 
enough to have the time and inclination to read all these classes of litera- 
ture, and at the same time be in a position to add thereto the advantages 
of personal observation, you cannot fail to become, a thorough and reliable 
underwriter. But whatever you read, do not neglect the insurance jour- 
nals, for while it may be important to know the insurance judgments and 
experiences of our predecessors of long ago, and benefit thereby, it is more 
important that you should understand the questions and conditions of the 
present and base your action thereon, for events and conditions coming 
under your personal observation will be safer and more intelligible prec- 
edents for you to follow in after-life than the events which occurred 
twenty years ago, found recorded in books, and of which you at ere not per- 
sonal observers. 

The great number of insurance journals, books and publications now 
being issued and seeking favor and patronage naturally suggests the in- 
quiry " Which is the best?" In connection with this inquiry I am re- 
minded of the Kentucky colonel's remark about whiskey. k * All whiskey is 
good, sah, but some whiskey is better than other whiskey." 

Read as much as you can, but try to read intelligently and understand- 
ingly. Learn to distinguish the true from the false theories, to separate 
the grain from the chaff, and when you are in doubt do not hesitate to ask 
questions. Read those things first which may have a bearing or a refer- 
ence to the work which you are doing, and do not forget that the general 
information, knowledge and theories gained by reading will give you the 
basis or foundation of an insurance career much the same as the reading of 
Blackstone's Commentaries gives the aspiring lawyer the broad, general 
principles of law upon which his chosen profession rests. 

There is much of the detail of the insurance business which we cannot 
gather from books or from literature ; a knowledge of these details must 
come to you by personal experience, but those of you who will first lay the 
broad foundation of general knowledge through reading, the details of the 
business will have a safe and sound foundation. 





Agard, J. J., Special Agent, Hartford Fire Insurance Company. 

Anderson, Hugh, Adjuster, Salt Lake, Utah. 

Andre, A. A., Independent Adjuster. 

Andrew, John, Special Agent, Butler & Haldan. 

Argall, F. G., Special Agent, Balfour, Guthrie & Co. 

Ashton, Geo. F., Special Agent, Fireman's Fund Ins. Co. 

Avery, Frank M., Special Agent W. J. Callingham. 

Bagley, W. H., Special Agent, Phcenix and Home Insurance Com- 

Bailey, J. D., General Agent, Insurance Company of North America. 

Barkman, F. C, Assistant Manager Continental Insurance Company. 

Barnett, B. N., Adjuster. 

Bangs, Franklin, Assistant Secretary, Home Mutual Insurance Co. 

Bates, Leslie, Special Agent, Gutte & Frank's Agency. 

Beck, J. M., Manager, Fire Association of Philadelphia. 

Beckett, L. J. 

Belden, H. K., Manager, Hartford Fire Insurance Company. 

Bertheau, C, Manager, Hanover Insurance Company. 

Bertheau, Max A., Assistant Manager, Hanover Insurance Co. 

Boardman, Geo. C, General Agent, ^Etna Insurance Company. 

Borchers, H. H., Special Agent, New Zealand Insurance Company. 

Boyd, H. C, Assistant Manager, Rudolph Herold's Agency. 

Bradford, John D., Deceased. 

Broomell, B. B., Special Agent, National of Hartford Fire Insur- 
ance Co. 

Bromwell, L. L.. General Agent, Milwaukee Mechanics Insurance 

Brown, Edward, General Agent, Brown, Craig & Co. 

Brown, A. M., Special Agent, Brown, Craig & Co. 

Brush, R. G., Special Agent, Liverpool & London & Globe Insur- 
ance Company. 

Burke, H. R., Special Agent, Royal and Norwich Union Insurance 

Butler, Geo. E., General Agent, Phcenix Assurance Company of 

Callingham, W. J., General Agent, Scottish Union and National, 
and Orient Insurance Companies. 


Chalmers, W. L., Fire Insurance Adjuster. 

Christensen, (lnis.. Manager. Delaware and American Central Insur- 
ance ( lompanies. 
Cofran, J. \V. G., Manager. Hartford Fire Insurance Company. 
Conrad, J. G., General Agent. Voss. Conrad & Co. 
Craig, Homer A., General Agent, Brown. Craig & Co. 
Craig, Hugh. Manager. New Zealand Insurance Company. 

Danker. H.. Assistant Manager. Transatlantic Fire Insurance Co. 

I). 'cring. Chester, Special Agent. Brown. Craig & Co. 

Delafield, Robt. H.. Special Agent. 

Devlin. Frank J.. Manager, Atlas Assurance Company. 

De Veuve. James H., Independent Adjuster. 

Dibbern. J. H., of Manheim, Dibbern & Co.. City Agents. 

Dick. B. C General Agent Sun Insurance Company of S. F. 

Dickson, Robert, Manager, Queen. Royal Exchange and Connecticut 
Insurance Companies. 

Donnell. A. C. General Insurance Agent. Okell. Donnell & Co. 

Dornin. Geo. D., Manager. National Fire Insurance Company of 

Dornin, Geo. W.. Assistant Manager, National Fire Insurance Com- 
pany of Hartford. 

Driffield. V. C, Manager, Transatlantic Fire Insurance Company. 

Dubois, S. V., Special Agent, Lion, Imperial, and Sun Insurance 

Dugan, A. G., General Agent, Springfield Fire and Marine Insurance 

Dutton, W. J., Vice-President, Fireman's Fund Insurance Company. 

DuVal, W. S., General Manager Pacific Coast Department. Con- 
tinental Insurance Company. 

Ecklin. Chas. C, Special Agent. Home Mutual Insurance Company. 
Edwards. L. B., Superintendent of Agencies, with Balfour. Guthrie 
& Co. ? s Agency. 

Fabj. R. P., Special Agent, Fireman's Fund Insurance Company. 

Farnsworth, Ed. P., Adjuster. 

Farnum, N. C, Special Agent, Home Mutual Insurance Company. 

Faymonville, Bernard, Second Vice-President and Secretary. Fire- 
man's Fund Insurance Company. 

Fennel, Henry T., Special Agent, Palatine Insurance Company. 

Fogarty. J. T.. Special Agent, R. V. Watt's Agency. 

Folger. Herbert, Manager, Portland Branch. New Zealand Insur- 
ance Company. 

Frank. Wm., General Agent. Gutte & Frank's Agency. 


Fraser, W. A., Special Agent. Fire Association. 

Francis. Guy. Special Agent. 

Friend, W. H., Secretary. Sun Insurance Company of S. F. 

Fuller, J. L., Special Agent, Royal Insurance Company. 

Gartner. A. F., Special Agent. Phoenix and Home Insurance Com- 
panies, Portland, Oregon. 

Gazzam, W. L., Special Agent, ^Etna Insurance Company, Seattle. 

Gibbons, W. H., Special Agent, Brown, Craig & Co. 's Agency. 

Gilcrest, Frank M., Special Agent, Royal and Norwich Union. 

Grant, Geo. F., Manager, London and Northern Assurance Com- 

Grant, H. M., Manager, Western of Toronto, British America and 
American of N. Y. Insurance Companies. 

Grant, Tom C, Manager, North British & Mercantile Insurance 

Gunnison, A. R., Special Agent and Adjuster, Palatine Insurance 

Gurrey, A. R., Adjuster. 

Greene, M. J., Special Agent, Continental Insurance Company. 

Grim, Alfred R., Assistant Manager, Alliance Assurance Company of 

Gutte, I., General Agent, Gutte & Frank. 

Haldan, E. B., General Agent, Phoenix Assurance Company of Lon- 

Hall, O. N., Special Agent, Fire Association of Philadelphia. 

Haven, Chas. D., Resident Secretary, Liverpool and London and 
Globe Insurance Company. 

Herman, A. 

Herold, Rudolph, General Agent, Hamburg-Bremen and Niagara 
Insurance Companies. 

Heron, John D., Special Agent. 

Hewitt, Dixwell, Special Agent, Union Assurance Society. 

Hicks, F. S., Insurance Agent, Los Angeles, Cal. 

Hill, Wm. H., Special Agent, Brown, Craig & Co. 

Hillman, J. R., General Agent, American Central, Delaware and 
Pacific Insurance Companies. 

Holmes, Jno. M., Special Agent, Hartford Fire Insurance Company. 

Hopkins, W. B., Special Agent, London & Lancashire Fire Insur- 
ance Company. 

Hamilton. J. K.. Special Agent. Insurance Company of North 


Qalsey, H. G., Special Agent, Fireman's Fund Insurance Company. 
Bunter, R. D., Special Agent, Fireman's Fund Insurance Company. 
Hughes, Ed. O., Special Agent, Palatine Insurance Company. 

[ves, S. D., General Agent, Fireman's Fund Insurance Company. 

Jacobs, Julius, General Agent. 

Jacoby, Franz, General Agent, Prussian National Insurance Com- 
James, N. T.. United States Manager for Alliance Assurance Co. 
Jones, Alfred, Adjuster, Vancouver, B. C. 

Kinne. C. Mason, Assistant Resident Secretary, Liverpool & London 
& Globe Insurance Company. 

Lamping, L. F., Special Agent, Springfield Insurance Company. 

Landers, W. J., Manager, Lion, Imperial, and Sun Fire Insurance 

Lank tree, J. B. 

Lavery, J. G., Adjuster. 

Lockey, Richard, Adjuster, Helena, Montana. 

Lowden, W. H., Resident Secretary, North British and Mercantile 
Insurance Company. 

Laton, Chas. A., General Agent. Palatine and United Fire Insurance 

Leonard, Geo., Assistant Manager, Transatlantic Insurance Com- 

Lord, Leslie, Special Agent, Geo. D. Dornin. 

Magill, A. E., General Agent, Phoenix and Home Insurance Com- 

Mailliard, J. W., Insurance Agent. 

Mann, H. R., General Agent, Mann & Wilson's Agency. 

Manning, F. J. H., Special Agent, Palatine Insurance Company. 

Maris, Wm., Special Agent, Brown, Craig & Co. 

Marshall, J., Jr., Special Agent Robert Dickson's Agency. 

Maxwell, J. D., Insurance Agency. 

McElhone, F. H., Special Agent. Fireman's Fund Insurance Com- 

McCarthy, Thomas J., Adjuster. 

McKowen, J. H., Adjuster, Spokane, Wash. 

McVean, D., Special Agent, Transatlantic Fire Insurance Company. 

Meade, Calvert, Adjuster. 

Mel, Louis, Special Agent, ^Etna Insurance Company. 

Mendell, Geo. H., Jr., Special Agent, Fireman's Fund Insurance 


Merrill. M. H.. Special Agent. 

Miles. D. E.. Assistant Manager. London & Lancashire Fire Insur- 
ance Company. 

Mitchell. Geo. M.. Adjuster. New Zealand Insurance Company. 

Morrison. Ed. C. Special Agent. ^Etna Insurance Company. 

Marston. J. A.. Special Agent. Balfour. Guthrie & Co. 's Agency. 

Miller. T. L.. Special Agent. 

Medcraft. R. C Sub-manager. Imperial and Lion Insurance Com- 

Morgan. W. O.. Special Agent. Home and Phoenix Insurance Com- 

Morrow. J. H.. Special Agent. W. J. Callingham's Agency. 

Mullins. C. F.. Manager. Commercial Union Assurance Company. 

Naunton. R. H.. Special Agent and Adjuster. 

Nearney. T. A.. Special Agent. Northwestern National Insurance 
( Jompany. 

Niebling. E. T.. Special Agent. Commercial Union Assurance Com- 

Niles. Edward. Special Agent. London Assurance Corporation. 

Nippert. Paul M.. Special Agent. Home and Phoenix Insurance 
( Companies. 

Okell. Charles J.. Okell. Donnell & Co. 

Osborn. R. W.. Special Agent. Brown. Craig & Co. 's Agency. 

Outcalt. Peter. Adjuster. 

Palache. Whitney. Special Agent. Hartford Fire Insurance Co. 
Parker. Chas. T.. Assistant Manager. Palatine Insurance Company. 
Parker. S. S. C. Special Agent. Okell. Donnell & Co. 
Pope. T. E.. Assistant General Agent. ^Etna Insurance Company. 
Potter. E. E.. General Agent. 

Reed. Wm. 

Ridling. A. G.. Special Agent. Continental Insurance Company. 

Scott. Chas. O.. Special Agent. Insurance Company of North 

Seaton. L. M.. Special Agent. Fireman's Fund Insurance Company. 

Sewell. A. F.. Special Agent. Springfield Insurance Company. 

Sexton. Wm.. General Adjuster. Fireman's Fund Ins. Co. 

Sinclair. A. P.. Special Agent. Phoenix and Home Insurance Com- 

Smalley. B. D.. Adjuster. Seattle. 

Smedberg. W. R.. Smedberg & Mitchell's Agency. 

Smith. Ben. J.. Special Agent. Robert Dickson's Agency. 


Smith. ('. \\\. Special Agent, Alliance Assurance Company. 

Smith. H. Brownson, Adjuster. Dallas. Texas. 

Smith. H. H.. Special Agent. Catton. Bell & Co. 

Smith. Roderick E., Special Agent. Fire Association of Philadelphia. 

Smith. Sidney H.. Special Agent. London & Lancashire Fire Insur- 
ance Company. 

Spencer, I). A.. General Agent. Westchester Fire Insurance Com- 

Spencer. Ceo. W.. Manager. Manchester. Caledonian and American 
Insurance Companies. 

Spencer. H. McD.. Special Agent. Balfour. Guthrie & Co. 

Speyer, Walter M.. Special Agent. Mann & Wilson. 

Spinney. Chas. S.. Special Agent. Butler & Haldan's Agency. 

Sprowl, E. G.. Special Agent. Liverpool and London and Globe 
Insurance Company. 

Staples. D. J.. President. Fireman's Fund Insurance Company. 

Stillman. A.. Secretary Executive Committee Board of Fire Under- 

Story, ('has. R.. President. Home Mutual Insurance Company. 

Storey. Frank C. Special Agent. Holla V. Watt's Agency. 

Stoy. Samuel B.. Special Agent. London & Lancashire Fire Insur- 
ance Company. 

Stuart. C. A.. Assistant Manager. Western of Toronto. British 
America. American of New York Insurance Companies. 

Thomas. W. P.. Superintendent of Agencies. Commercial Union 
Assurance Company. 

Thompson. E. L.. Special Agent. Northwest Insurance Company, 
Portland. Oregon. 

Thompson. Chas. R.. Special Agent. German-American Insurance 

Thornton. A. W.. Special Agent. Insurance Company of North 

Tiedemann. Tudor. Special Agent. Brown, Craig & Co. 

Turner. G. W.. General Agent. Northwestern National Insurance 

Tyson. Geo. H.. General Agent. German-American Insurance Com- 

Tyson. R. J.. Special Agent. German-American Insurance Company. 

Young. Frank W., Special Agent. Home Mutual Insurance Com- 
pany. Denver. 

Voss, F. G.. General Agent. Voss. Conrad & Co. 


Warren, Albert M.. Special Agent. 

Watson, I. S.. Special Agent. Home Mutual Insurance Company. 
Watt. Rolla V.. Manager Royal and Norwich Union Insurance 
( Companies. 

Weinmann. Louis. Assistant Secretary. Fireman's Fund Insurance 

Wenzelburger. A.. Adjuster. 

Westlake. W. B.. Special Agent. Home Mutual Insurance Company. 

Wetzlar. A. J.. Fire Insurance Adjuster. 

Wheeler. Dalton. Adjuster. Los Angeles. 

White. F. G.. Denver. Col. 

Whitley. X. B.. Special Agent. Brown. Craig & Co. 

Wilson. D. B.. Adjuster. 

Wilson. J. Scott. General Agent. Mann & Wilson's Agency. 

Williams. T. H.. Special Agent. Imperial Fire Insurance Company. 

Wooley. W. C. Special Agent. Springfield Insurance Company. 

Wright. L. A.. Special Agent. Alliance Assurance Company of Lon- 

Honorary Members. 

Bigelow. H. PL. Adjuster. San Francisco. 

Brodrick. W. J.. Insurance Agent. Los Angeles. 

Carpenter. K. W.. Jones street. San Francisco. Cal. 

Conroy. T. J.. Assistant Secretary Executive Committee Board of 

Fire Underwriters. 
Dudley. W. W.. Manager. Manchester Fire Assurance Company, 

Edwards. J. G.. Publisher Coast Review. San Francisco. 
Houghton. J. P., San Francisco. 
Hine. C. C. Editor Insurance Monitor. New York. 
Jack. A. Hill. General Manager. National Insurance Company of 

New Zealand. 
Kirby. D. L.. No. 1 Pine Street. New York City. 
Low. Geo. P.. Electrical Inspector. Board of Fire Underwriters. 
McLellan. G. P.. Insurance Agent. Los Angeles. 
Olmstead. W. N.. 62 Cedar Street, room 10. New York. 
Parkhurst. H.. Surveyor. Board of Fire Underwriters. 
Porter. F. H.. 303 California Street. San Francisco. 
Smith. A. D.. Surveyor. Board of Fire Underwriters. 
Winne. Peter. Helena. Montana. 




President V. C. DRIFFIELD 

Vice-President HERBERT FOLGER 

Secretary and Treasurer LOUIS WEINMANN 







California Knapsack— GEO. F. GRANT, Editor 
ED. XILES. Assistant Editor 



Fire Underwriters' Association 


K .^\J/^ 

San Francisco, Cal., February 18th and 19th, 1896 








Annual Report of Secretary-Treasurer Louis Weinmann 3 

Report of Executive Committee R. W. Osborx 5 

Report of Library Committee F. G. Aug all 6 

Address of the President V. Cakus Driffield 7 

"Forty-Five Years Ago" D. B. Wilson 14 

"Counter Business'" Alfred R. Grim IT 

"A Plea for Local Board Organization " Leslie Bates 27 

" Suggestions of a Newspaper Man" Harry Biglow 29 

"Non-Cancellation Clause" A. W. Thornton 30 

"Inspections" J. H. Morrow 38 

"Thoughts of a Hired Man" E. NlLES 45 

"Individual Benefit to be Derived from the Association" 

D. M. McVeax 50 

"Some Requirements of the Times" F. G. Argall 56 

"A Talk" Frank J. Devlin fti 

Committees' Reports: 

Adjusters' Charges C. Mason Kinne 73 

Mortgage Clauses— Majority Report W. H. Lowdex 88 

Mortgage Clauses — Minority Report Wm. Sexton 90 

Re-insurance Clause • Geo. H. Tyson 97 

V" Advertising" Amos F. Sewell 75 

\" The Special from a Local's Standpoint" . . . Frank D. Brown 79 

- Nosin' Round" Wm. Maris 102 

"Collect or Cancel" Geo. W. Dorxin 105 

Report on the President's Address R. V. Watt 108 

Election of Officers 110 

Californian Knapsack 113 

Annual Banquet 128 

List of Members 134 




President V. C. DRIFFIELD 

Vice-President HERBERT FOLGER 

Secretary and Treasurer LOUIS WEINMANN 







California Knapsack— GEO. F. GRANT, Editor 
ED. NILES. Assistant Editor 

Fire Underwriters' Association 


First Day. 

San Francisco, Cal., February 18th, 1896. 

The twentieth annual meeting of the Fire Underwriters' Associa- 
tion of the Pacific was called to order by the President, V. Carus 
Driffield, on Tuesday, February 18th, 1896, at 10 o'clock A. M. 

On motion, there being" no objection, it was ordered that the call- 
ing of the roll be dispensed with, and that the Secretary be requested 
to simply note those present. 

The following members were present : , 

A. A. Andre, F. G. Argall, 

George E. Butler, H. K. Belden, 

Geo. C. Board man, Leslie Bates, 

C. Bertheau, R. G. Brush, 

H. A. Craig, Chas. Christensen, 

Geo. D. Dornin, Geo. W. Dornin, 

V. C. Driffield, Frank J. Devlin, 

H. Danker, L. B. Edwards, 

J. G. Edwards, Wm. Frank, 

E. P. Farnsworth, Henry T. Fennel, 


Herbert Folger, 
R. P. Fabj, 
J. L. Fuller, 
A. R. Gunnison. 
I. Gutte. 
H. M. Grant, 
R. D. Hunter, 
Geo. Leonard, 
L. F. Lamping, 
I). E. Miles, 
J. H. Morrow. 

D. McVean. 
Wm. Maris, 
P. M. Nippert, 
Whitney Palache. 
H. E. Parkhurst. 
William Sexton. 
Walter M. Speyer. 

A. F. Sewell, 

B. D. Smalley. 

C. W. Smith, 

E. L. Thompson, 
A. W. Thornton. 
I. S. Watson, 
W. B. Westlake. 

N. C. Farnum 
W. A. Fraser, 
Geo. F. Grant, 
A. R. Grim, 
Frank M. Gilcrest, 
J. K. Hamilton. 

C. Mason Kinne. 
Leslie Lord, 
Calvert Meade, 
Louis Mel, 

Geo. H. Mendell. Jr. 
Thos. McCarthy. 
R. H. Naunton, 
R. W. Osborn, 
Chas. T. Parker. 
A. R. D. Paterson. 
Edw. G. Sprowl. 

D. A. Spencer. 
C. S. Spinney. 
Chas. O. Scott, 
R. J. Tyson, 
Tudor Tiedemann. 
Roll a V. Watt, 

L. A. Wright, 

The President then announced that, as the minutes of the last 
meeting were in print, the reading of the same would be dispensed 

The Secretary then read his annual report as follows : 

San Francisco, Feb. 18, 18%. 
Mr. President and Members of the Fire Underwriters' Association of the Pacific: 
Gentlemen : — 
I have the honor of submitting herewith my annual report as Secretary 
for the fiscal year ending February 19th, 1896. 

At the commencement of the year, February 21st, 1895, we had a mem- 
bership of 197. During the year but two members have been added, mak- 


ing a total membership of 199. This number has been decreased by three 
resignations, one death and fifteen being dropped from the roll for non-pay- 
ment of dues and ineligibility, so that the active membership is now 180. 
The unusual decrease was caused by the demoralization in the insurance 
business forcing many members to seek employment other than insurance 
and thereby becoming ineligible. For the same cause it was difficult to 
obtain new members. It is earnestly requested that every effort be used 
the coming year to make good the loss in membership that we have 

The number of honorary members remains the same, being IT. 

Death has visited us but once, taking away our esteemed associate, 
John D. Bradford. 

Five meetings have been held during the year, exclusive of this one, 
with an average attendance of thirteen. 

Notwithstanding the large decrease in membership, the Association is 
in excellent condition financially. 

The Secretary has been put to much annoyance and the Association to 
some expense by members not sending in change of address. It is hoped 
that anyone changing his address will at once notify the Secretary. 

The wisdom of selecting those who reside in the city as members of the 
Election Committee was conclusively shown during the year as no difficulty 
was experienced in obtaining the requisite number to ballot on candidates. 
Very respectfully submitted, 



On motion, duly seconded, the report of the Secretary was ap- 
proved as read. 

The Treasurer then submitted his annual report as follows : 


San Francisco, February .8th, 1896. 
To the Fire Underwriters' Association of the Pacific; Mr. President and the 

Members of the Association: 
Gentlemen :— 

I have the honor to hand you herewith my report as Treasurer for the 
fiscal year ending February 19th, 1896 : 


Balance on hand February 19th, 1895 $389 81 

Received from dues 856 00 

Received from sale of badges 2 00 

Received from sale of annual proceedings 35 75 

Received from admission fees 10 00— $1,293 56 

4 treasurer's report. 

l8 95 . 

Feb. 26. Salary of Secretary (R. W. Osborn) $100 00 

March 4. Reporting and transcribing Annual Proceedings. 53 75 

April 10. Bosqui Engraving & Printing Co 30 00 

April 10. D. S. Stanley & Co 11 75 

April 30. D. S. Stanley & Co. (funeral circular) ....... 1 75 

April 30. Louis Weinmann (stamps and telegram) .... 1 80 

April 30. Wm. Mitchell (delivering circulars) 1 00 

May 24. A. G. Dugan (flowers, J. D. Bradford 5 00 

June 12. D. S. Stanley & Co 1 75 

June 21. Taxes 1895 1 50 

July 24. Rent of assembly room (July, June and May) . . 30 00 

July 25. Coast Review (400 copies Annual Proceedings). 265 00 
Sept. 2. Wm. Mitchell (delivering circulars August) . . 1 50 

Sept. 13. Spoiled check 

Sept. 13. D. S. Stanley & Co. (circulars for August) ... 1 76 

Oct. 28. Postage and delivering circulars in July 5 60 

Oct. 30. Rent of assembly room (Aug., Sept. and Oct.) . . 30 00 
Nov. 22. Wm. Mitchell (delivering November notices) . . 2 10 

Dec. 12. D. S. Stanley & Co. (Nov. cir. and del. notices) . . 4 75 

Dec. 31. Louis Weinmann (taxes and stamps) 1 00 


Jan. 9. Fireman's Fund Ins. Co. (Policy No. 1,250,872) . . 5 70 

Jan. 15. Insurance Law Journal 6 00 

Jan. 28. Insurance Law Journal (back numbers) 2 00 

Jan. 31. Rent of assembly room (Nov., Dec. and Jan.) . . 30 00 
Feb. 5. D. S. Stanley & Co. (special notices for Feb.) . . 1 75 

Feb. 6. Wm. Mitchell (delivering notices) 1 50 

Feb. 10. Payot, Upham & Co. (300 engraved invitations) . 12 50 

Feb. 11. D. S. Stanley (250 printed envelopes) 1 25 

Feb. 17. Stamps (annual meetings and dinner notices) . . 1 70 

Feb. 17. Wm. Mitchell (delivering notices annual meeting) 1 50— $613 91 

Balance on hand February 18, 1896 $679 65 


President Driffield announced that the report had been approved 
by the Auditing Committee, and there being no objection, it was 
ordered that the report be approved as read. 

Then followed the report of Mr. Osborn, Chairman of the Execu- 
tive Committee, as follows : 

Mr. President and Gentlemen: — 

In pursuance of a constitutional provision, your Committee examined 
the books of the Secretarv and Treasurer and found them correct. 


The unsettled condition of affairs during the past year has had a marked 
effect upon the Association, and yet we feel that notwithstanding this, the 
Treasurer's report is a subject for congratulation. At the commence- 
ment of our year the enrolled membership was 197. Since that time death 
has come upon us in one instance and removed from our midst the lamented 
J. D. Bradford. There have been three resignations, and fifteen have been 
dropped from the roll for non-payment of dues. This latter item was un- 
usually large, and of course is attributable to the lack of employment on the 
part of a number of the specials. 

The Association received in dues the sum of $856, fees $10, and for the 
sale of Annual Proceedings the sum of $35.75. This latter item ought to 
have been materially increased, for the reasonable price of additional copies 
should enable the members to subscribe liberally to them. 

The total receipts for the year were $903.75, and the disbursements 
$613.91. Heretofore the Association has not been called upon to pay rent, 
but the past year drew from the treasury the monthly rental of $10. 

The item that your Committee desires to particularly call attention to, 
and which we think will be the source of great satisfaction to the mem- 
bers, is the balance on hand of $679.65. We commenced the term with a 
balance on hand of $389.81, and notwithstanding a considerable loss for the 
non-payment of dues, a handsome balance is shown with which to com- 
mence the new year. 

Your Committee feels it proper to express regret at being unable to 
report greater progress during the year, and our sympathies are with the 
President at the unauspicious time at which he commenced his administra- 
tion, but we sincerely trust that the present session will compensate for 
what may have been inevitably omitted during the past twelve months. 

We have no recommendations to make. 

Respectfully submitted, 

R. W. OSBORN, Chairman. 

San Francisco, February 18, 1896. 

On motion, duly seconded, this report was then placed on file. 

The report of the Library Committee was then read by Mr. 
Argall as follows : 

To the President and Members of the Fire Underwriters' Association of the 

Gentlemen : — 

In presenting to you their report for the past year, the present members 
of your Library Committee would say that their work has been materially 
hampered by the successive changes in the personnel of the Committee. 
The Chairman was requested to take charge only so late as the middle of 
December, since which time, owing to pressure of other engagements pre- 


viously contracted, it has been impracticable for your Committee to do 
much more than outline work for the future. 

It would appear that no report was presented by the Library Com- 
mittee of the Association at the 19th Annual Meeting, nor was any appro- 
priation then made for use during the past year. Under these circum- 
stances interest in the library seems to have languished; and, beyond a 
few trifling items for postages and the like, no actual expense has been in- 
curred. Some progress has been made, however, towards a rearrangement 
of the library and in considering projects for its extension and improvement. 

As heretofore we would suggest that the thanks of the Association be 
extended to the respective publishers of the "Coast Review," "Pacific 
Underwriter," "Insurance Monitor," "The Weekly Underwriter" and 
" The Standard," for their courtesy in supplying us gratuitously with their 
valuable publications, and to Mr. F. H. Porter of the Inspection Bureau for 
frequent and careful attention given to the filing and binding of periodi- 
cals in the Association rooms. We are also indebted to the various under- 
writers' associations in the Eastern States, Great Britain, and the 
Australasian Colonies, for copies of their annual reports ; and we suggest 
that this Committee be authorized to continue sending to such other organ- 
izations not more than twenty exchange copies of our Annual Proceedings. 

We are of the opinion that many members of the Association could add 
valuable material to the library in the shape of reports, old tariff books, 
and interesting documents relating to the early years of the insurance 
business on the Pacific Coast, which may otherwise be wholly lost to us 
after a comparatively short period. The Committee can easily procure 
pamphlet boxes and other conveniences for preserving such material in 
good order, if encouraged to do so. We are indebted to Mr. Geo. W. 
Spencer for a copy of the policy form used by the original Manchester Fire 
Insurance Company, in 1773; and suggest that other papers of the same 
kind might be procured without difficulty. 

We have noticed that with one exception the expenditure for the library 
during recent years has been small, but that the Executive Committee has 
recommended on at least one occasion, that it be increased. Your Com- 
mittee believe this can be done with corresponding profit to the Associa- 
tion, and that a somewhat more liberal expenditure will much increase the 
efficiency and value of the library. Previous appropriations have been 
limited to one hundred dollars which, in ordinary years, should and will be 
enough; but, at this stage, after two years of inaction, your Committee 
would recommend that the appropriation be increased to one hundred and 
fifty dollars. Our treasury is in good condition, and it would seem the 
amount suggested can well be spared. In addition to adding materially to 
the contents of the library, it will be necessary to provide a new book-case, 
as the present one is already filled and a number of volumes are suffering 
from exposure to dust in the rooms. To bring the library up to date it will 
also be necessary to purchase some of the legal technical publications which 
have appeared during the last two or three years. 

Some of the files of the "Coast Review" and other periodicals are 
broken, and other books are missing. We recommend that the new Library 


Committee establish rules vvith the view of preventing any further injury 
in this direction. 

In 1894 a Committee recommended the preparation of a Blue Book con- 
taining a complete catalogue of the library, a list of all the members from 
the beginning of the Association, and a complete index of our Association 
Reports. We recommend that this work be undertaken during the coming 
year, the expense of same to be included in the proposed appropriation. 

In conclusion, we trust that more interest in, and appreciation of, the 
library will be shown by the members than has been noticeable in the past, 
and congratulate the Association upon possessing an excellent foundation 
for a very valuable permanent library. 

Respectfully submitted, 

F. G. ARGALL, Chairman. 


The President stated that inasmuch as the report of the Library 
Committee contained valuable suggestions and recommendations, 
it would be wise to refer it to a committee to report at a later stage 
of the proceedings. 

On motion the report was received and referred to the committee 
that will hereafter be appointed to consider the President's annual 

President Driffield then delivered his annual address as follows : 

Gentlemen of the Fire Underwriters' Association of the Pacific: 

After a turbulent year of general demoralization and excited competi- 
tion, — of grave anxiety and responsibility to the manager and general agent ; 
of arduous effort, with small hope of compensating fruition, by the field man ; 
and of a serious struggle for existence on the part of many local agents; and 
during which our mental energies have been sorely taxed, we are, in fur- 
therance of the objects of our Association, again assembled in friendly con- 
clave. Such objects are constitutionally denned as being the promotion of 
harmony and good practice in our business ;,the interchange of views, opinions 
and personal experiences ; and the discussion of topics of interest to the pro- 
fession ; and it is to be earnestly hoped that this meeting may not fall short 
of the attainment of such aims. It is hard to realize that a twelvemonth has 
elapsed since our last annual meeting, but, despite the rapid flight of time, 
it must be patent to us all that the year just ended has marked a memorable 
epoch in the history of underwriting upon the Pacific Coast. Having ex- 
perienced a decade of prosperity under the regime of the late lamented Pa- 
cific Insurance Union, we have since been confronted with a period of de- 


mobilization — almost approaching a state of chaos— marked by general inade- 
quacy of rates, increased cost of business, and a surrender by the companies 
of many of the safeguards with which we formerly considered it essential to 
surround ourselves. And why this transformation? Has the community at 
Large been afflicted with a corresponding period of depression and dis- 
quietude I Such has not been the case. What Nemesis, then, has suddenly 
appeared to balk our efforts and paralyze our rationality? To what cause are 
we to ascribe the necessity for the existing condition of our business affairs? 
These questions are far reaching, and involve the consideration of details 
(many of which are, happily, almost forgotten) too numerous for recital in 
this short address, but, bitter though the reflection may be, it must be ad- 
mitted that to no influence outside of our own circle is to be ascribed this 
deplorable state of affairs. 


An era of continued prosperity, fostered by such an inequality of rates 
as resulted in an abnormal profit in the larger centers of our population, 
evoked the cupidity and blunted the conscience of not a few of the fraternity. 
Principle was sacrificed to greed, self-respect to policy, and obligations were 
not only lightly evaded but were openly broken. The seeds of distrust being 
thus sown, germinated rapidly, and, ere long, many of those who would have 
scorned to take the initiative in such derogatory practices lent their adher- 
ence to the same, justifying, to themselves, their actions by recalling the 
real or fancied sins of their fellows. The Compact authorities brought to 
bear upon the subject all the tact and diplomacy of which they were capable, 
and for which they were justly celebrated, and in a mild manner adminis- 
tered such discipline to the recalcitrant members of the Union as seemed to 
them advisable, but grew faint-hearted with their task, and shirked the re- 
sponsibility of boldly meeting the issue and of strictly enforcing the pre- 
scribed penalties against members who were notorious for their infraction of 
the rules. 

And so the evil grew, practically unchecked, until it assumed such di- 
mensions as to be intolerable to those who remained true to their pledges. 
Is it to be wondered that we were met with withdrawals from our Union, 
and that in addition to our own internal troubles we had to face the element 
of Non-Board competition? 


As an experimental and corrective measure, rates and rules were sus- 
pended in certain localities, and then ensued a rough-and-tumble fight in 
which business was secured at grossly inadequate rates and at an equally 
excessive cost. This partial demoralization, however, proved insufficient to 
bring about the desired results, and although strenuous efforts were being 
made, with a seeming probability of success, to effect a re-organization which 
would give hopes of stability, we were suddenly confronted with such addi- 
tional resignation from the Union, as rendered the further life of that body 
an impossibility. Then the storm broke and gathered force as it spread, and, 


within a short space of time, a large proportion of the business of California 
was auctioned off to the lowest bidder. 

It is needless to enter into details, and to present an array of compara- 
tive figures for your benefit. You all know the results of 1895, a year which 
under normal conditions would have resulted in a most favorable showing 
for the companies, and which, under the circumstances, turned out far less 
disastrously than was generally anticipated. But the effects of the demoral- 
ization of the past twelve months cannot be gauged by the results of the 
year just ended ; 1896 and 1897 are yet to be heard from, and in the light of 
the experience we have already gathered upon the subject, the results to be 
anticipated at the close of the present and also of the following year, are 
to be viewed with apprehension and anxiety. 


While we cannot but deplore the unsettled state of affairs which has ex- 
isted during the past year, I feel convinced that the same was, under all the 
circumstances, a matter of absolute necessity, and that while the occasion 
therefor might have been postponed for some short period, yet the same 
was inevitable sooner or later. It is also my firm conviction that our exist- 
ing troubles will ultimately prove a blessing in disguise, and that the at- 
mosphere will have been so thoroughly cleared thereby that we may con- 
fidently look forward to a long continued period of prosperity and peace. At 
the present writing it seems probable that the meeting of underwriters 
recently held in Monterey may prove productive of the desired results, for it 
seems scarcely credible that the comparatively slight differences of opinion 
now existing between a small number of the representatives of the com- 
panies should prove of sufficient moment to thwart the earnest efforts being 
made for the attainment of a successful reorganization. 

The new constitution of the Board of Fire Underwriters which, at the 
meeting alluded to, received so great a preponderance of approval, fully pro- 
vides for the three essential necessities: — reduction in the cost of our busi- 
ness ; prevention of rebates ; and the abatement of the credit evil. And up- 
on a subsequent equalization of the rates, and with a strict and prompt en- 
forcement of the rules, and, above and beyond all else, with the disposition 
of absolute bona fides on the part of each and every representative of the 
companies, there should, it appears to me, be every prospect of a long-lived 
and prosperous organization. 

With this hope, fervently expressed, I leave the subject, and will re- 
vert briefly to our own particular affairs, but before doing so, and in order 
that I may not be misunderstood, I wish to state that I recognize fully that 
our Association is composed of elements drawn from both (so-called) Board 
and Non-Board sources, and that we, as a body, are entirely non-sectarian in 
that regard. Also that our membership is comprised largely of field men 
and others who are not directly interested in the subject of my remarks ; but, 
in view of the fact that there is not one of us who is not, at least, indirectly, 
concerned in the welfare of the business, I trust you will agree with me 
that the exigency of the occasion called for more than a passing notice of 
the existing condition of insurance affairs upon the Pacific Coast. 



'Tin 1 past has been a decidedly "off " year with us as an Association, and 
1 regret to say we have but little to show, in the shape of accomplishment, 
since our last annual meeting. The intervening quarterly meetings have 
evoked but little interest, and have attracted scarcely sufficient attendance 
to provide the number necessary to constitute a quorum. This apparent lack 
of interest has, undoubtedly, been largely due to the disordered condition 
of our business affairs, and it was scarcely to be expected that we could look 
for any great degree of animation in our councils when our minds and ener- 
gies were concentrated upon the struggle in which we have been involved. 
At the last regular meeting, however, the Committee upon "Adjusters' 
Charges and Contribution Thereto" made an extended report, which was 
adopted and will be presented for your final consideration, during the pres- 
ent sessions, and it is to be hoped that the subject will receive your careful 
attention, and that this meeting may not adjourn without the passage of 
such a well-defined rule, in the premises, as may be acceptable to all con- 

From the report of the Secretary and Treasurer, which you have already 
heard, you will have perceived that the financial condition of the Associa- 
tion is all that could be desired, as, after having met all obligations for ex- 
penses incurred, we have to our credit in the bank the very satisfactory 
balance of almost $700. 

It is customary, I believe, that some portion of our surplus funds should 
be devoted to the extension of our library, and the expenditures of our spare 
moneys in such direction is to be commended, but, whether or not such 
course is to be further pursued, I would suggest that the Library Committee 
give more attention to the matters over which they have control, and that 
such arrangements be effected as will lead to the proper custody and preser- 
vation of our books and periodicals. It is, I think, essential that a complete 
catalogue of our library possessions should be prepared. We have files of 
periodicals which should be assorted and bound. Volumes are missing which 
should be traced and restored to our shelves. No book should be taken from 
our rooms unless a proper receipt therefor has been given by the member 
exercising that privilege, and such receipt should not be cancelled until the 
volume taken has been duly returned. I have spoken to Mr. Porter, of the 
Inspection Bureau, upon the subject, and he informs me that he would be 
pleased to allow his clerk to act as the honorary custodian of our library, 
should you see fit to act upon these suggestions. 

It is with some concern that I call your attention to the decrease in the 
number of our membership, but this again is a natural sequence of the un- 
settled condition of affairs with which we have had to contend during the 
past year. But few of the withdrawals have been voluntary. Loss of posi- 
tion and consequent change of occupation or of abode have conspired to bring 
about the regretted results. 

Once during the year just ended has the Grim Messenger knocked at our 
portals. Shortly after our last annual gathering we were all deeply con- 
cerned and distressed to learn of the death of our esteemed colleague, Mr. 


John D. Bradford, who had but recently come among us. He was with us 
sufficiently long, however, for those who had the privilege of his acquaint- 
ance to realize and appreciate his individual worth and the high standard of 
his ability. Appropriate resolutions of respect to his memory and of condolence 
with his friends were duly passed, and copies thereof were dispatched to his 
relatives and to the company of which he was the honored representative 
upon the Coast. 


By reason of the difficulty of getting our members together no reception 
was, during the year, tendered by this body to the Fire Underwriters' 
Clerks' Association, as recommended at our last annual meeting, but it is to 
be trusted that the incoming President may meet with better success, and 
that this desirable feature, instituted by ex-President Watt may become a 
permanent custom at our semi-annual meetings. The Clerks' Association 
was, however, invited to submit papers, written by its members, for the 
examination of a Committee to be appointed by our body, with the under- 
standing that the best of such papers would be read at this meeting and also 
incorporated in our printed proceedings. It will be remembered that at 
our last annual meeting a similar course was pursued, and that we were 
favored by a very excellent paper, written by Mr. T. Danforth Boardman. 
Our invitation has this year, however, met with no response, and I am in- 
formed by President Anderson that the causes which have contributed to 
the lack of interest in our own proceedings have similarly affected those of 
the Clerks' Association. Under more favorable auspices there is every rea- 
son to believe that such invitations would meet with a hearty response, and 
would redound to our benefit, and to the credit and encouragement of the 
junior Association. 

Q I • A R T E RL Y M E ET I N G S . 

It was suggested by our preceding President that more favorable 
results might probably be attained by a return to our former method of 
monthly instead of quarterly meetings as at present, but in view of the ex- 
perience of the past year, I am of the opinion that such a change would be 
decidedly inopportune at the present time, and that until our business affairs 
are in a much more settled condition, it would be wiser to content ourselves 
with a limited number of regular meetings during the year. It is greatly 
to be desired, however, that the interest of our members in such meetings 
should be stimulated, and with that end in view, I would suggest that, be- 
sides the transaction of the routine business, there be provided for the 
special consideration and discussion of those in attendance suitable papers 
and topics, to be pre-arranged by the Executive Committee. 

In the past, many matters of importance and interest to the managerial 
element of our Association have been the subjects of our deliberations, but 
the conclusions arrived at have rarely proved effective, as we have lacked, 
as a body, the executive authority necessary to lead to the enactment of 
such measures as have recommended themselves to our understanding. We 


are. at this meeting, to have reports from various Committees, on the fol- 
lowing subjects : " Adjusters' Charges and Contribution Thereto," " Mort- 
gage Clause," and "Re-Insurance Clause," and I trust that the time and 
Labor of these Committees may not have been wasted, and that those in au- 
thority will give such reports the consideration to which they are entitled. 
If the recommendations therein contained proved generally acceptable, the 
members of this Association will harbor no resentment should the newly- 
formed Board of Fire Underwriters see fit to steal our thunder. 

During the present meeting you will be provided with galley proofs of 
the constitution and by-laws as they now exist, with all amendments enacted 
since the date of the last publication thereof in 1888, and, if no material 
changes are desired, a long needed new edition thereof will be issued with- 
out further delay. 

The existing method governing the election of members was the subject 
of criticism at our last annual meeting, but as only two occasions have been 
presented during the year for the testing of the adequacy thereof, it would 
appear to me that the present plan has had an insufficient trial to warrant 
any immediate change therein. 


As before expressed there appears to be a reasonable probability that 
the newly formed Board of Fire Underwriters may shortly become an opera- 
tive institution. Should such, happily, prove to be the case, it is to be trusted 
that the opportunity which now presents itself for the introduction of needed 
reforms in the workings of such an organization may not be neglected. An 
equitable system of schedule rating, capable of being easily understood and 
appreciated by the average layman, should be provided. The application of 
the co-insurance clause, as affecting the rate, should be insisted upon. Open 
permits for " other insurance " should be disallowed. A simple system of 
classification of fire premiums and losses should be inaugurated and under- 
taken by the Board authorities. A specific charge for the electrical hazard 
should be made upon buildings (and their contents) installed with electric 
wiring, unless a certificate from a recognized competent authority is fur- 
nished, to the effect that such installation has been properly and efficiently 
performed. The " iron-safe " clause of Texas might, with benefit, be re- 
quired upon all policies covering country merchandise stocks. These are but 
a few r of the desirable measures which will suggest themselves to your 
minds as worthy of adoption by the new Board. 


As we are to listen to a paper upon the subject of local board organiza- 
tions I will not dwell upon this topic at any length, but it would be an injus- 
tice to refrain from referring to the utility of such bodies, as amply 
proven during the past year. The Northwest, especially, has provided us 
with examples of the effectiveness of such organizations, and while 1 feel 
that the same should be subject to the control and direction of a "central " 
governing body, and that there is some need of danger to be apprehended 


in the relegation to our local agents of the authority the principal represen- 
tatives of the companies alone should possess, yet we must acknowledge and 
appreciate the fact that, but for the existence of these local boards the 
demoralization with which we have had to contend would have been greatly 


It has been my aim to interest the younger and more diffident element of 
our membership in the proceedings of the Association, and with that end in 
view, I have sought papers from those who have not previously contributed, 
for our benefit, their written ideas. From an inspection of the programme, 
you will perceive that, with one exception, the writers are unknown to 
fame — that is, the fame which is conferred upon those of you who have 
already crossed the Rubicon and distinguished yourselves upon the occasion 
of our previous annual gatherings, and for these neophytes I crave your con- 
siderate indulgence, at the same time expressing it as my belief that the 
latent talent, now brought to light, will impress you with the fact that the 
resources of the Association are very far from being exhausted. 

The absence of theoretical and technical papers from our programme is 
due to the fact that the time of our members has been so fully occupied 
during the past year, as to preclude the possibility of the thoughtful prepar- 
ation requisite to the production of the same, and should the subjects pre- 
sented by our contributors provide insufficient scope for discussion, it is to 
be trusted that you will introduce such topics of interest as may furnish 
material for your argumentative consideration. 

It is possible that you may hear from several tardy contributors whose 
names do not appear upon the programme. Of one additional paper, at least, 
we are certain — "Thoughts of a Hired Man," furnished by our old standby, 
Ed. Niles, is sure to prove of interest. 

The twenty-first year of our existence — the year of our majority — opens 
promisingly. The weather is glorious; good crops are assured; the trade 
prospects for the Coast are brighter than has been the case for some years. 
The dark clouds which have enveloped us during the past year are gradually 
lifting, and already display the silver lining which it is to be hoped will 
develop into the glory of the noontide sun. For the present let us revel 
in anticipation. 

On motion of Mr. Watt, duly seconded, the address was referred 
to a committee for consideration, together with the report of the 
Library Committee. 

The President announced that the Association would be favored 
with a paper contributed by Mr. D. B. Wilson, and that, as that 
gentleman was unfortunately absent from the city, Mr. Osborn had 
kindly consented to read the same. Mr. Osborn then came forward 
and read as follows : 



Our worthy President took advantage of my high regard for him, and 
in an unguarded moment obtained a promise to recite at this meeting some 
personal experiences of nearly half a century ago. That many changes 
have taken place during that period is but a natural process, yet having 
kept up with the procession the man has to a certain extent changed with 
the times. It has therefore occurred to me that it might be more or less 
interesting, at least to the younger members, to learn the methods pre- 
vailing forty-five years ago. I shall take but a few moments to recite 

The company with which the writer commenced his insurance career 
was organized under the mutual plan, by special act of the Legislature, 
there being at that time no general laws for the formation of insurance 
companies. This company did business on the mutual plan, and also on 
what was then called the joint stock plan. In the first instance the poli- 
cies were issued for six years, and in the latter they were issued from one 
month to one year. Whatever profits were derived from the stock depart- 
ment inured to the benefit of the mutual members. 


As stated, these policies were issued for six years, and the premium 
was computed at six annuals, for which a note was given. Upon this note 
a cash payment of 10 per cent, was made, and the residue payable at such 
time or times as the losses and expenses of the company required. The 
policies not only contained the usual conditions, but incorporated therein 
were the charter and the by-laws of the company, and members were bound 
by the provisions of all three. 

In each instance an application was taken. These applications were 
rather voluminous, corresponding, to a certain extent, with the farm appli- 
cations now in use on this Coast. No policy was permitted to be issued 
until an application had been filed, signed by the insured and certified by 
the agent. The latter, if he took the risk, must certify that he had exam- 
ined same and recommended the risk. 

Applications in the city were submitted to an inspector who, after mak- 
ing the examination, endorsed his comments on the back of the application, 
which was then presented to the President for approval or rejection. 

Insurance maps were entirely unknown. After a very careful canvass 
of the city in which we were located, sufficient interest among the compan- 
ies could not be aroused to compensate a party for making a map of the 
city. They preferred relying upon the old method of block books and in- 
spection. While this method had a tendency to delay the work and the 
approval of business, yet on the other hand it surrounded the business with 
the chief safeguard of inspection, which is so frequently omitted in these 


We did not have classifications of hazards in our office. The old Presi- 
dent used to say that it was not necessary, as he knew the proper rate to 


charge. The first interview with him, after I had assumed the manage- 
ment of a company, is still fresh in memory, and it was in the endeavor to 
obtain information as to how he arrived at the various rates charged, 
knowing as I did that there was nothing on the books of the company to 
show what each particular class of business had cost. Feeling at that time 
the importance of knowing the cost, we opened a set of books in which were 
credited the premiums received on the various classes and charged with 
their respective losses and the pro rata of expenses. This, in comparison 
with the tables now in use, was of necessity crude and very imperfect, but 
we derived from it considerable satisfaction. 

We recall the criticism of an eminent member of the profession, who, 
upon being shown this classification, and with its merits explained with 
more than ordinary pride, replied that in his judgment it was of little or 
no value as it covered too limited a field. I replied that it covered the en- 
tire field then under cultivation, and that out of this field we must derive 
sufficient revenue to pay the losses and expenses, and that this classifica- 
tion had enabled me to determine satisfactorily to myself that there were 
classes of hazards in the field in which we operated that could not be safely 
written at the prevailing rates. 

The hazards as a class were similar to those in this city, although, I 
think, of better construction. Manufacturing establishments were almost 
entirely constructed of brick, and the same character of construction ap- 
plied to the better class of mercantile risks and to dwellings. Frame ranges 
in cities were entirely unknown, and in the smaller towns there were 
very few. 


Inspections were made with great care. The whole building or plant 
was examined in detail, commencing with the cellar and extending to the 
roof. Inspectors were required to know the defects, if any, and the proper 
method of remedying the same, and where serious defects were discovered, 
with failure on the part of the owner to correct the evil, the risk was 
declined. This was most natural, as we had no tariff defining a standard 
risk, with charge for such deficiencies, as we now have. 

The careful method of inspection outlined as above seems to have been 
neglected when rating organizations began to make their appearance. In 
those times rates were based upon the hazard of individual cases, and while 
I am a strong advocate of rating organizations intelligently administered, 
x yet I am somewhat in doubt as to their being the best school for the educa- 
tion of the underwriter. The effect on the mind of the special due to the 
fact that the risk carries a special rate, has oftentimes manifested itself 
to the writer in the careless manner in which risks were examined by the 
field men. They act as though they believed the hazard had received every 
consideration necessary when the rate was made. Woe be to the inspector, 
in the times recited, if a serious defect existed in the risk which was 
demonstrated by the fire and which he had overlooked or failed to report. 

Rates were as a rule higher than those prevailing on this Coast a year 
or two past. We had a smaller territory to cultivate, and necessarily, the 


income being restricted, the rate was necessary to meet the hazard. 
The facilities for the extinguishment of fires were of the crudest and 
most unsatisfactory nature. The most approved methods were in our large 
cities, and even there they merely consisted of hand engines under volun- 
teer departments, and very frequently were with inadequate water supply. 


The compensation to agents consisted of 10 per cent, upon the cash pre- 
mium paid and a policy fee of $1.00. City solicitors, however, received 
merely the policy fee as named. This, however, became changed as the 
methods of business required. As an illustration of the growth of compen- 
sation, I will state that one agent who began his business career contem- 
poraneously with the writer not only received subsequently the policy fee 
of $1.00, but in addition a commission of 25 percent, upon the cash premium. 

In those days there was no such thing as reinsurance practiced by the 
companies with which I was associated. In fact, a reinsurance policy was 
unknown until after I had been connected with the business some ten or 
fifteen years. 

All excess lines were placed by us, we requiring the company taking 
the line to give us an equal amount in return, and on such exchange busi- 
ness commission was neither paid nor received. But the usual reciprocity 
account was very carefully watched. 


Adjustments were then conducted somewhat differently than at this 
date. Where a total loss was reported, the adjuster did not visit the scene 
of the fire until after proofs of loss had been filed. As there were no 
printed forms in use, these proofs were oftentimes very voluminous, for in 
some instances they contained not only the written portion of the policy, 
but also the conditions of the policy, classification of hazard, and the char- 
ter and by-laws of the company. The assured was required to furnish the 
proofs at his own expense, and in a majority of these instances the proofs 
were prepared by attorneys. If, however, the proofs were prepared by the 
adjuster at the request of the assured, the former charged the latter a 
liberal fee for his compensation. 

After the proofs were sworn to, the adjuster then took charge of the 
loss. The partial losses of course were acted upon as soon as possible, and 
the method of adjusting stock losses was then similar to the present. 
Where an agreement could not be reached, an appraiser was appointed. 
On the contrary, with buildings, a builder's estimate was obtained, and 
the adjustment was effected upon that basis. I do not recall any appraise- 
ment being had on buildings during the early part of my career. 

The foregoing is a brief recital of the methods in vogue forty-five years 
ago, and while I have merely touched upon each subject, yet I trust that 
sufficient has been written to outline the careful and conservative methods 
of those times. To those who retrospect and recall the past so vividly, the 
present suggests some remarkable changes in the business. 



The President — Gentlemen, the difficulty which I experienced in 
obtaining Mr. Wilson ? s consent to write a paper for us has been 
amply rewarded by the interesting contribution we have just listened 
to. upon the methods in vogue in the halcyon days of forty-five years 
ago. I did not think that Mr. Wilson was so far advanced in years 
as to be so thoroughly acquainted with these methods; but he cer- 
tainly has reached greater maturity than I imagined. Are there 
any remarks upon the paper just read ? (Pausing). There appear- 
ing to be none, we will now pass to a paper entitled, "A Plea for 
Local Board Organization, ' ' by Leslie Bates. I do not see Mr. 
Bates present, and we will pass that paper for the present. 

The next paper is entitled ''Counter Business," by Mr. Alfred 
R. Grim. 


In determining upon an article to be read before this meeting, it oc- 
curs to me that the acceptance of country business over the counter is a 
matter which should be given more serious consideration than it appears to 
have received ; and, although a subject not admitting of much scope as a 
paper, is none the less of great importance. 

Of course, there are certain classes of risks, notably special hazards, 
which a company is fully justified in writing when properly inspected, 
known to be a paying investment, and not considered as being within the 
jurisdiction of any particular agency. 

I think, however, that brokers' business should not be accepted when 
located within territory controlled by an agent; and it is this part of the 
subject with which I desire most to deal. 

The knowledge to a company that the business will be under the con- 
stant supervision of a competent representative is one of the fundamental 
reasons for the establishment of an agency. Therefore, with what degree 
of confidence can we accept a line from a broker simply on his mere repre- 

When business is offered in this manner, if we feel confident that the 
line is entirely controlled by the broker, we should refer the risk to our 
agent, with the understanding that, if reported on favorably, the commis- 
sion be divided between the broker and himself. 

But how often will the broker accede to this arrangement ? Invariably 
he will refuse such a proposition, and generally succeeds in placing the 
business where he will receive the benefit of the entire commission. 

It is difficult to comprehend why merchants and owners of property 
resort to the practice of placing their insurance through a broker rather 
than an accredited agent who resides in, and is identified with, the town 
where such property is located. 



There are, in my opinion, three reasons in support of the foregoing: 

First— Either the assured is not able to satisfactorily effect insurance 
in the town where his property is located, for reasons best known to the 
agent, or, does not desire the agent to be informed regarding the amount 
he is carrying, for reasons best known to himself. 

Second— The broker is often enabled to give the assured a cheaper com- 
modity by sacrificing a portion of his commission. 

Third— The assured has interests in various towns, and desires his in- 
surance to be handled exclusively by the city broker. It seems hardly fair 
to thus deal solely with a city representative. 

If business men would give the matter closer consideration, they would, 
I think, arrive at the conclusion that the benefits to be derived from their 
insurance should revert to the agent residing in the town where the 
assured' s business is conducted. 

It would be advantageous to the merchant to do this; the natural conse- 
quence being that the agent will feel obligated to trade with those who 
give him insurance, thus resulting in a reciprocity beneficial alike to both. 


Is it justice to our representative to write business over his head? Is 
it not virtually depriving him of what is rightfully his, according to the 
accepted interpretation of the commission of authority ! 

What a row "ye Pacific Coast manager" would raise if he learned 
that his Eastern brethren were writing on property located within the 
jurisdiction of the Pacific Coast department ! 

Why then should not the poor agent arise in his wrath and cry "Do 
unto others as you would be done by " ? 

Much desirable business may be lost by abstaining from this practice, 
but, in the long run, the loss will be more than overcome, as the agent will 
work more willingly, more conscientiously and with better heart, and is 
bound to accomplish the most satisfactory results when he knows that his 
interests are being protected. 

A dangerous element in accepting a risk over the agent's head, is the 
possibility of his also securing a line on the same property, thus creating 
an overline ; he being unaware of the fact that the company had already 
issued a policy. 

Occasionally risks will be taken through a broker in towns where the 
company has no representative. This appears to me to be anything but 
good underwriting. 

Risks located in tow r ns where it has not been deemed advisable to 
establish agencies, should surely be refused when offered by brokers. 

From personal inquiries I learn that during the past year but little 
counter business has been written, owing chiefly to the convulsive condi- 
tion of the insurance situation on this Coast. 


I am of the opinion that if, by mutual agreement, this acceptance of 
direct business be entirely discontinued, it will result in more harmony ; 
and will, in some degree, if not materially, reduce the loss ratio, as risks 
taken in this manner are in many cases not inspected ; and it is a well- 
known fact that non-inspection will inevitably result in no profit. 


The President— Gentlemen, the local agencies have found a valua- 
ble champion in Mr. Grim. I think you will all agree generally in 
his conclusions, but we shall be glad to hear discussion. 

Mr. Watt — The President appears to be afraid the programme 
will move along too rapidly. I will therefore say a few words on 
this subject. I am fully in accord with the principles laid down in 
the paper, as to the inadvisability of taking risks over the agents' 
heads where we are not represented. But there is an old saw to the 
effect that consistency is a jewel rarely found ; and while local agents 
seriously object to our writing business in their territory over the 
counter in San Francisco, they are very tenacious of the privilege of 
writing business in the territory of other local agents. I suppose we 
have all had experience with the agent in San Jose who wants to 
write business in Los Gatos, or the man in Los Angeles who wants 
to write business in Pasadena, or the man in Stockton who wants to 
write business in Lodi ; but to write business in San Francisco, over 
the head of an agent in San Francisco is not admissible. There are 
very few outside mercantile risks offered by San Francisco brokers, 
except such as cannot secure insurance in their own town ; but on 
the other hand there are numerous manufacturing risks located in 
the interior, the owners of which are residents of San Francisco. 
The excuse for placing the latter class of risks in this city, is that 
these men desire to know with whom they are transacting their 
business and prefer dealing with the brokers handling their city 

I believe there should be mutual concessions ; and if the new 
board, to which our President has referred, could make a compact 
with the local agents throughout the Coast, conceding them the 
right to control the business in their respective localities on condi- 
tion that every company should have a representative (if desired) in 


every town. I have not had much trouble recently in locating my 
companies, but there was a time, when I was manager of other 
companies, that I could not find an agent in some towns. I went to 
Sacramento fifteen times to place the Liberty Insurance Company ; 
under such circumstances, do you suppose that I would refuse a first- 
class Sacramento risk offered over the counter? I would take as 
many as 1 could get! 

Mr. Sexton — Mr. President, I think Mr. Grim did not propose in 
his paper to refuse to write business in an outside city, but he did 
propose to refuse to write over the head of the agent. We have a 
right to write where we have no agent in a place ; but where we 
have an agent, it would only be proper to let him write the business. 

The President — I believe the paper went a little further. Mr. 
Watt stated the proposition as laid down in the paper, that it was 
not judicious to accept business over one's counter in San Francisco, 
from a point where that office has a representative ; and further, 
that in outside towns generally, where we do not consider it wise to 
establish agencies, it could not be looked upon as a desirable busi- 
ness. I fully agree with Mr. Watt's remarks. I believe that in 
matters of this kind there should be mutual concessions from the 
office to the agent, and from the agent to the office. 

Mr. Watt — A short time ago, there was quite a flurry over the 
fact that the risk of the Fredericksburg Brewery of San Jose was 
being placed in San Francisco; and among other officers charged 
with writing it contrary to the rules of the Board was our good friend 
Mr. Herold, manager of the Hamburg-Bremen. He justified himself 
by saying that he could find no agent in San Jose; on which account 
he accepted the business over the counter here. The agitation over 
that matter resulted in his securing a good agent there. 

Mr. George F. Grant — I believe country business should not be 
received through a city broker. Of course it is to a certain extent 
a practice, and we have to look at the cause of that practice. Years 
ago, before there were fire departments and water supplies, in towns 
w T hich were then villages, there were no local agents. The merchants 
sought protection through the houses where their goods were pur- 


chased, and the San Francisco merchant at that time sought policies 
from three or four brokers only. Their favorite broker built up a 
business in that way, which, to him, was a profit, and sometimes a 
larger net profit than enjoyed by the company issuing the policy. It 
was a very difficult thing to cut off the profit of a broker. It was 
tried to a certain extent fifteen years ago, and from that day to this 
the broker has gradually lost his country business. I think the time 
has come when we can safely say that it is right that he should lose 
it all. The villages having grown to towns, and some of the towns 
having grown to cities, the local agents in cities are earning their 
entire living from fire insurance, and it is only right and proper, it 
seems to me, that we should recognize that to them alone should 
come the revenue of the commission on the business of their own 
city. The broker, in the meantime, sought the advantage of being 
called a paid solicitor, or has also been created a city agent; and 
instead of the modest ten per cent., which he one time did receive, 
he now receives much more; perhaps three times as much. He can 
easily afford to give up his hold on the country premiums. 

Aside from that, in the last twelve months, we have encouraged 
local board organizations all over the Pacific Coast; and you will find 
in the constitution a right, or agreement, by which the office in San 
Francisco is requested to agree that the manager will not receive or 
allow to be received over the counter in San Francisco, any country 
business. A large majority of the offices have agreed to this. In 
fact, I do not know as there are many who do not agree to it. Of 
course, the small percentage will ever be a friction; and if we could 
have a mutual agreement, as suggested in the paper of Mr. Grim 
whereby all offices will hereafter decline to write through the city 
broker a country risk, I think we will have made a great long step 
in a very good direction. 

Mr. Gilcrest — From a traveling man's standpoint, lam decidedly 
opposed to writing business over the counter. We are frequently 
met with the question from a local with whom we are wishing to 
place our company, " What is the use of my taking your company, 
when the largest risks in our district are written over your counter ? ?r 


Again. I am met with the statement from the local that they 
have had a fire there, and he adds, " I was glad that such a company 
wrote the risk over the counter in the city, it being no benefit to their 
local agent.'' It seems to me that if there should be a reorganiza- 
tion of our union, that there should be some law made whereby this 
thing would be regulated. The local agent should, at least, get a 
portion of the commission, and be interested in the matter for what 
he can get out of it. For instance, take a mining plant up in the 
mountains, where the owners are living here in the city. They 
desire to do the business here with people with whom they are 
acquainted ; which is natural. If the matter is left with the agent 
up in the district, in case the mines give out, or if, in the meantime, 
the property should depreciate, and the hazard is increased, the 
local knows it. He not only knows it, but if he is interested in it he 
will interest himself for the benefit of his company : and it seems to 
me that he should have a share in that commission. 

Mr. Park hurst — As I frequently come in contact with the local 
agents and local boards in the North, I would like to say that the 
local agents of the company generally feel that in representing their 
companies they have certain rights which should be mutual with 
the company ; and when they see certain risks being written in San 
Francisco, they feel, to a certain extent, a loss of interest in that 
particular risk. They feel that in maintaining their office expenses, 
and other items that they have to contend with in their particular 
sections, that they should have some recognition. I therefore agree 
with Mr. Watt, that there should and could be concessions on each 
side, which would be beneficial to all. 

Mr. Watt — This is very interesting to me, Mr. Chairman, I have 
bestowed as much thought upon it as upon any other part of our 
business, and while I am fully in accord with the principles laid 
down in Mr. Grim's paper, when we come to the practical applica- 
tion of them, we find the difficulty. Where we take one outside 
risk from a broker, we take a large number from other companies, 
principally by way of reinsurance. 


The local agents probably suffer as much from one local agent in 
the community coralling and writing in his own companies the entire 
line on a large risk, his companies reinsuring the excess in San 
Francisco as from the San Francisco broker. If companies only 
carried their own net lines such risks would be divided among the 
local agents where the risk is located. As far as my office is con- 
cerned, we have three classifications of business: local, which is purely 
San Francisco: city-country, which is counter business outside of 
San Francisco, and sub-agency (?). Our city-country business is 
large and is almost wholly re-insurance of other companies, and 
covers risks located outside of San Francisco. 

Another difficulty occurs to my mind; viz., who has the rightful 
claim to a risk located halfway between San Jose and Los Gatos, or to 
illustrate, to what agencies does the Port Blakely Mills belong ? Does 
it belong to Port Townsend, to Seattle or to Tacoma? These are 
difficulties which come up when you try to apply a rule. Any rule 
or agreement arrived at, would necessarily apply only to risks located 
within the limits of the particular town in question. 

Mr. Folger — I am of the impression that it would be impracticable 
to limit the proposition that business should be placed where it exists, 
to the corporate limits of a particular manufacturing town, in cases 
of special hazards. On the Pacific Coast it never has been done, and 
probably no one here believes it will be done. For example, in 
Oregon city there is a mill which is owned by people in Portland, 
and the risk is placed by them in Portland. Under the Oregon 
State law, which requires a large deposit and excessive fees per 
annum, a limited number of companies did business in Portland 
eight or ten years ago, and at that time it was impossible to secure 
sufficient insurance to cover the woolen mill. It was customary, 
however, to place the business through one agency; and the surplus 
insurance was obtained in San Francisco, presumably through the 
principal of that Portland agent. The companies accepting the sur- 
plus line, it is true, were not doing business in Portland, or in Oregon 
at all; and under the suggestions made by Mr. Watt and Mr. Sexton, 
it would be in order for such companies to suffer the loss of the 


business. The Oregon agents would, however, probably claim that 
they were entitled to the commission, which they have never received. 

The Portland General Electric Company has its plant located at 
Oregon City, but it is really a Portland concern, and is operated 
from there. Within a few months they have made a new rule, pre- 
cluding any agent in Portland from accepting or writing for them 
a larger line than he can write in his own companies. Most of such 
lines are written on printed forms. Where they are not, there is 
always danger that through the number of agencies, the variations 
in form will increase every few years, and it will sometimes be so with 
printed forms. I had occasion to take one line in Portland, two 
weeks ago. where the printed form had been used^two years. By 
reason of changes in brick buildings, not strictly in accordance with 
the rules, the compact required that the form of three policies should 
be altered. It was overlooked by the examiners and by the agents, 
that the changes on three policies, out of a large number would 
create non-concurrency, on the theory that it might disappear after 
one year. There were serious objections to that course, and I sought 
to secure some arrangement by which all the policies should be made 
concurrent at once. This would be avoided if all policies were placed 
by one agency, but I do not wish to be understood as favoring that 

The question was raised of the right of agents, in the territory in 
the Northwest, to write all their business in their own towns; but 
you will be interested to learn that the seven members appointed at 
the first meeting of the Northwest Insurance Association to prepare 
resolutions, were not able to agree upon a resolution, which would 
require that agents in every town should write business in no other 
town; and that, while the Spokane agent was most profuse in his 
claims that the Spokane agent had been injured by the Portland 
agents, he fell down at once, when he was reminded that in Spokane 
he was writing risks not more than twenty or thirty miles away, and 
receiving the entire commission. I endeavored to have the commit- 
tee recommend that the commission be divided in such instances, 
but that was not supported. The concessions spoken of are neces- 


sary, but they must be mutual; and I am of opinion that if a rule 
be adopted discouraging the writing of country business over the 
counter, or writing business over the heads of agents, then the com- 
panies must make further concessions than they seem willing to 
make. It may then be possible that the company which is unable 
to obtain an agent in a particular town may have to refuse business 
in that town. 

The Chairman — I think we should all be satisfied with the ex- 
tended discussion on the very able paper of Mr. Grim. 

On motion, duly seconded, the Association adjourned until two 
o'clock P. M. 


Afternoon Session. 


The Chairman — Before proceeding with the regular order of busi- 
ness, I have a communication to read to you from Mr. Lockey, of 
Helena, a regular member of the Association. (Reads:) 

Louis Weinmann : Secretary The Fire Underwriters' Association of the 

Pacific, San Francisco, Cal. 
Dear Sir : — 

I fully intended to be present at the twentieth annual meeting of the 
Association, and was arranging my affairs so that I might be with you, but 
now I find it necessary to visit Denver and can not do so. I know that you 
will have a most enjoyable time and desire to extend my best wishes to all. 

Sincerely, R. Lockey. 

From Mr. John B. Fogarty, who promised a paper for this 
meeting, and who has laid himself liable to a penalty for his neglect. 
I have received the following telegram. (Reads:) 

Phillipsburg, Mont., Feb. 12, 1896. 
V. C. Driffield: Manager Transatlantic Ins. Co., 213 Sansome St., San 
Procrastination fatal, temperature ten below, ideas frozen. Please 
excuse me. 


Mr. A. W. Thornton, who is down upon the programme for a 
paper, has sent a telegram stating that the paper will be here, but 
that he will not arrive until Tuesday noon. He may come in during 
the afternoon session. We will, therefore, pass the reading of his 
paper for the present. 

We will have now the pleasure of listening to Mr. Leslie Bates: 
subject, ;; A Plea for Local Board Organizations. " 


(Mr. Bates came forward and read his paper, which was received 
with applause. ) 


There is no question but that every underwriter on the Pacific Coast, 
from the local agent to the manager, has awakened to the fact that it is 
much easier to disrupt than to restore ; and to the public at large, who, 
while freely taking advantage of the ruinous concessions offered by the 
insurance companies, realized the absurdity of the same, it has been a con- 
tinual source of surprise that a business requiring such enormous capital 
and resource as that of insurance should have been so easily plunged into 
the depths to which it has descended during the past twelve months, in 
this field, without stay or hindrance on the part of the one most affected — 
the local agent. 

There is no doubt that the reason for this anomalous condition lies in the 
fact that in the past the local agent in this department has not been in 
sympathy with the Pacific Insurance Union, a body which, while it claimed 
to protect him in the matter of uniform rates, also claimed jurisdiction over 
every official act of his, however trivial it might be, and under an arbitrary 
system absolutely controlled every incidental feature of the business, leav- 
ing the agent nothing to say as to the conduct of his affairs and reducing him 
to the position of a mere solicitor. 

Having no greater aim in life than the procurement of risks, and 
coming into frequent collision with the rules and regulations of the govern- 
ing and distant body of which he was not a member, and having no local 
organization to sustain him in a proper observance of the ethics, his ener- 
gies were expended as much against his fellows as in favor of himself. 
Having therefore no professional pride to sustain him, when the trial of his 
strength came, he was found wanting, and the result was the instant and 
complete demoralization of the business wherever the rate war was pushed. 

Had the agents in this State taken the same determined stand in the 
formation of local boards at the inception of the breaking of the Compact, as 
was taken by the agents throughout the whole Northwest, in all probability 
the books for the year just closed would have shown a very different result 
in the proportion of premium income to liability assumed, and in lieu of a 
condition of utter helplessness and of mutual distrust, which has proven so 
prejudicial to their own interest and that of the companies represented by 
them, the agents through their boards would have early restored order in 
their districts, and brought themselves before their companies and the 
public as men mindful of the great responsibilities resting upon them. 

Under a central governing body, controlling every detail of the business, 
the local agent cannot but deteriorate, through lack of mental exercise in 
the conduct of his business. He becomes but a machine, and there being 
no unanimity of action between him and his confreres, his hand is like that 
of the Ishmaelite — against everybody. The position of being a good solicitor 


may be all very well in its way, but every man should have greater aspira- 
tions than the mere getting of risks and of building up a premium income. 


Put the local agent on the basis that he is presumed, by his principals, 
to have, and to use judgment and discretion in the conduct of his agency, 
and that he is something more than an automaton, and he will begin to 
develop into that class of agent most desirable for a company to have — an 
agent who works for the good results to his company rather than a mere 
solicitor working for his commission. 

As an individual he may be able to do great things toward perfecting 
himself in his profession, but in a local board he will have a broader field, 
being able to assist in determining rules of action for the proper government 
of the business in which he is so important a factor, and by being in the po- 
sition of being able to demand recognition on points vital to his interests. 

There can be no better way of education than in allowing the agent the 
right to control his acts, always provided, however, that he does not tres- 
pass on the rights of others ; and no better method can be found of deter- 
mining the limits of such rights, than in the organization of the local board, 
so that the rights of all may be the rights of each. Given the local board, 
and the right of self government, the agent will acquire a proper independ- 
ence and a greater respect for himself and for the higher authority of the 
general board. A man who holds respect for himself, will hold respect for 
that work in life to which he has devoted his aims, and having respect for 
his work and in himself he will surely win the respect of the insuring 

Owing to methods in vogue for some years past our profession has cer- 
tainly lost caste with the public at large ; and the time is now propitious 
for a reversal of the verdict. 

Let the agents unite in their respective towns for their common 
protection, let them be induced to control themselves in all matters not 
absolutely the province of the companies, let them stand as a unit in the 
observance of their local rules, and a class of agents will evolve who will in 
all truth be the "backbone" of the business, and the probability of a 
repetition of the last disturbance will be reduced to a minimum, if not to 
an impossibility. 

If the recent painful experiences on this Coast do no more than stimulate 
the formation of local boards throughout this department, a great good will 
have been accomplished in tending to elevate the agency force by making 
the agent more self-reliant and in promoting an educational system which 
must redound to the benefit of all concerned. 


The Chairman — You have heard the paper of our friend Bates, 
who so ably champions the cause of local board organizations: and 


as he has served both as a local agent and as a field man, he 
speaks from a vast amount of experience. 

The subject of local boards has been touched upon in the annual 
address of the President, and it is apparent that the views expressed 
by Mr. Bates, and those which are felt by himself, do not entirely 
agree. I presume that other members will feel that the subject is 
one that' should be discussed. We will be pleased to hear from 

(After pausing.) As there seems to be no disposition to discuss 
the question of Local Board Organizations, we will now proceed with 
our next number, a paper entitled ' ' Non-Cancellation Clause, ' ' by 
A. W. Thornton. Mr. Thornton has not yet arrived, I see, and I 
therefore suggest the postponement of the reading of that paper and 
that we proceed to the following number, 4i The Suggestions of a 
Newspaper Man. v It is a brief paper, provided by Mr. Harry 
Bigelow, of the San Francisco News Letter, at my request. Mr. 
Bigelow, as you probably know, is the son of one of the original 
framers of our present organization, Mr. H. H. Bigelow. I have 
received a letter from Mr. Bigelow, expressing his regret at his 
inability to attend the meeting of the Association. 

(Here the Secretary reads the paper of Mr. Bigelow.) 


As an outsider and a newspaper man I have always enjoyed beyond 
measure, the happy, prosperous, generous manners of the insurance man, 
especially when compared with those engaged in other branches of the 
commercial world. 

To my mind, insurance is as much a profession as the law — of course there 
is the inevitable cry of " finance " from the multitude ; but, nevertheless, as 
old Prince de Talleyrand said: "Finance is more of a profession than the 
art of war." And the insurance business has reminded me so many times 
that it is one of the highest of the professions that I place it half way 
between the newspaper and the diplomatic. 

The underwriter is not a mere banker ; and he subordinates finance to 
his diversified arts. For instance, he must possess the shrewdness of a 
successful real estate dealer, the calculating and measuring genius of an 
architect, the commercial discrimination of a clever merchant ; and last but 
not least, that wit, grace and suavity of manner which renders him akin, 
in my mind, most undoubtedly, to the ambassador and the newspaper man. 


All three must possess the same arts, and all three seem of the one profes- 
sion to the discerning mind. 

And yet there is only one favor which the underwriters have not given 
to the third member of this trinity — the newspaper man ; that is, they have 
never established an assurance corporation for the benefit of lost manu- 
scripts. Think how delightful and simple it would be for Mr. Ned Hamilton, 
the eminent journalist, to be able to enter the office of Mr. Driffield or Mr. 
Watt and state that as he was about to send a long manuscript novel to Mr. 
Gilder of the Century for submission, he desired to insure it against fire or 
waste basket for sixty or ninety days. How simple and how perfect a 
solution of a writer's woes, to find that at a certain estimated premium he 
might be fortified against half of his anxiety and of his anticipatory fears. 

Therefore, in the name of these three sister professions I join with the 
newspaper men in asking from you gentlemen of the underwriters, this 
long looked for reformation. 


The Chairman — The paper furnished by Mr. Bigelow is not as 
lengthy nor as discursive as I thought it might have been, and it 
has evidently been written rapidly, in order to comply with the 
request. As the paper needs no discussion, we will proceed 
immediately with Mr. Thornton's paper as I see that he has arrived. 
It is with pleasure that I call upon Mr. Thornton to read upon the 
' ; Non-Cancellation Clause. ' ' 

(Here Mr. Thornton came forward, and his number was received 
with great applause. ) 


About a year ago inducements, more enticing than usual, were offered 
insurers to secure their business, and the consequence was that the then 
existing policies were canceled and written at reduced rates. But the 
agents who lost business started on the war path to get it back, and went 
the other fellow "one better." Policies were again canceled and written 
at even lower rates. To prevent this total demoralization of the business, 
and to force an insurer to retain a policy when written at a rate satisfactory 
to him, the non-cancellation clause was adopted. 

This was originally an agreement which the insured signed, stipulating 
that, in consideration of so much return premium, he agreed not to cancel 
the policy without the consent of the company. The form was afterwards 
changed, and instead of an agreement which the assured entered into over 
his own signature, the clause was generally inserted in the policy with a 
rubber stamp, and stated that, in consideration of the reduced rate at 
which the insurance was written, the right of cancellation conferred upon 


the insured in the printed portion of the policy or otherwise was waived and 


It has been questioned if this form of agreement be legal, and if a 
policyholder can waive his right to cancel and his claim for the return 
premium on his policy. Many misunderstandings have arisen over the 
adjudication of the case brought by Manager A. E. Magill against a policy- 
holder in Alameda county. We understand the Court then held that an 
indorsement or condition of a policy made with a rubber stamp was binding 
and legal ; and Mr. Magill secured a judgment against the policyholder 
for the amount of the premium. This was a decision of a Superior Court, 
and it has been argued that, had the case been appealed, the decision 
would have been reversed. The ground for this argument is the Civil 
Code of California, section 2617, Avhich reads : — 

"A person insured is entitled to return of premium as follows: 1. — To 
the whole premium, if no part of his interest in the thing insured be 
exposed to any of the perils insured against. 2. — When the insurance is 
made for a definite period of time, and the insured surrenders his policy, to 
such proportion of the premium as corresponds with the unexpired time, 
after deducting from the whole premium any claim for loss or damage under 
the policy which has previously accrued." 

(And let me ask in parenthesis if you have ever studied the last two 
lines of the above. It is simply nonsense.) 

This is our law as we find it, and apparently an insurer may collect 
return premium under the conditions set forth. But look at section 3268 of 
the Civil Code, wherein it says : — 

"Except where it is otherwise declared, the provisions of the foregoing 
fifteen titles of this part, in respect to the rights and obligations of parties 
to contracts, are subordinate to the intention of the parties, when 
ascertained in the manner prescribed by the Chapter on the Interpretation 
of Contracts ; and the benefit thereof may be waived by any party entitled thereto, 
unless such waiver would be against public policy." 

Thus we see that an insurer my waive the right given him in section 
2617, for none of us would say that such waiver would be against public 
policy, — without saying anything about the assured' s particular policy. 
Why, we scarcely ever issue a contract of indemnity that we do not waive 
the right given companies under our laws : Refer again to the Civil Code, 
section 2616 and read : — 

•'An insurer is entitled to the payment of premium as soon as the thing 
insured is exposed to the peril insured against." 

Do we get our premiums as the law says we should ? No; we waive 
what we are "entitled" to, and so may the policyholder waive the return 
premium which he may be "entitled" to. 


In the case of Kirby vs. Phoenix Ins. Co. (13 Tenn. 340) it was held 
"the stipulation that in case of cancellation the unearned premiums shall 
be refunded, is for the benefit of the assured and he may waive it. n 

But can the assured waive his right to cancel his contract, even though, 
as we have seen, he may waive the return of the unearned premium ? 
Suppose Dick Smith has been coaxed and cajoled into taking a policy bear- 
ing the non-cancellation clause in the Never-pay-a-cent-if-you-can-help-it 
Fire Insurance Company of Skookumchuck, Wash., and he afterwards dis- 
covers that the company is on the verge of bankruptcy, its paper is 
protested, and the party from whom he wishes to secure a loan refuses to 
accept the company as security ; is Dick Smith prevented from securing 
proper indemnity, and can he not destroy his policy or cancel it by return- 
ing it to the company with the statement that he desires to surrender and 
cancel it without any return of unearned premium ? Suppose after doing 
so he secures other insurance in a substantial company and that his prop- 
erty burns ; could the second company claim forfeiture on the grounds of 
other insurance without notice ? Or could it force a contribution by the 
first company, claiming it to be "other insurance whether valid or void ?" 
Certainly not ! The first contract is canceled and therefore cannot be other 
insurance. What is the California law on the subject ? 

"Section 1699. The destruction or cancellation of a written contract, or 
of the signature of the parties liable thereon, with intent to extinguish 
the obligation therof, extinguishes it as to all the parties consenting to the 

"Section 1700. The intentional destruction, cancellation, or material 
alteration of a written contract, by a party entitled to any benefit under 
it, or with his consent, extinguishes all the executory obligations of the 
contract in his favor, against parties who do not consent to the act." 

It would seem, therefore, that the assured may waive his right to 
return premium, but he cannot be deprived of his right to cancel the con- 
tract. Nor do the companies desire to prevent him from so doing. 


But the non-cancellation clause is a double-barreled, back-actioned, 
swivel-jointed affair, — the extra barrel and the back-action having been 
added to protect (?) the "poor, innocent public" who were suffering by 
the insurance rate war and by the advantage the companies were taking 
in inserting a waiver of return premium in the policies. This protective 
part pretends to stipulate that the company issuing the policy will not can- 
cel it. Of course there are many strings to this agreement, — such as, "the 
company agrees not to cancel on account of increase in rates," or "for the 
purpose of securing an additional rate," or "except some additional hazard 
be added to the risk," etc., etc. The different loop-holes are legion. 

Did you ever give your five year old boy a six-shooter and a bowie- 
knife to play with ? These are harmless toys in a bo} T 's hands as compared 


with the second section of the non-cancellation clause in the hands of some 

But is this agreement indorsed on a policy by an agent or manager 
binding on the company ? 

And is it wise to enter into such an agreement, even if it be legal ? 

To the second question we emphatically answer "No." It is not advis- 
able to permit an agent to use his option and discretion as to the risks on 
which he irrevocably binds the company, nor to allow him to fix the rates 
and lines beyond possible control. Think of an agent in Los Angeles, or 
any other place, writing $100,000 on a stock of gasoline at a rate of ten 
cents, giving as an excuse for so doing that the assured had a nice dwelling 
and if he did not write the gasoline at a low rate he would not get the 
dwelling ! Think of the impossibility of canceling or obtaining reinsur- 
ance ! ! And, worse still, think of your field man killing that agent on his 
next visit ! ! ! 


As to the legality of this agreement not to cancel a policy, let us refer 
to the New York standard form, where we find the following language : 

" No officer, agent or other representative of this company shall have 
power to waive any provision or condition of this policy except such as by 
the terms of this policy may be the subject of agreement indorsed hereon 
or added hereto." 

There is no ambiguity in the above, and all agents who issue policies 
containing that sentence (as all New York standard policies do) and who 
attach to the policies agreements not to cancel, deceive the insurers and 
exceed the authority conferred upon them as agents. 

Of course there are a few companies (but very few) which issue policies 
giving the managers power to waive the conditions thereof. Such mana- 
gers as a rule hold powers of attorney from the companies they represent, 
and consequently may issue any form of contract they choose. An argu- 
ment touching on the legality of the question in hand does not apply to 
such cases. 

On referring to the provisions of the New York standard form we find 
that an agent may, by agreement indorsed on the policy as provided for, 
waive the company's right to claim forfeiture on account of other insurance, 
or on account of chattel mortgage, or on account of vacancy, forclosure 
proceedings, title, interest, assignment of policy, etc., etc. But he cannot 
make the company liable for loss caused by invasion, insurrection, riot or 
civil war, or by theft ; nor can he agree to continue a policy in force after 
the building insured thereunder has fallen, except it fall as the result of 
fire. Nor can he waive the company's right to cancel, for the policy says, — 
"This policy shall be canceled at any time by the company by giving five 
days' notice of such cancellation; " and there is nothing in this condition 
which can possibly be construed as "a subject of agreement which may be 
indorsed hereon or added hereto." 



Judge Andrews of the Supreme Court of New York said, in relation to 
this subject: — "Where the restrictions upon an agent's authority appear 
in the policy and there is no evidence to show that his powers have been 
enlarged, there seems to be no good reason why the authority expressed 
should not be regarded as the measure of his power." 

In the case of Quinlan v. Providence Washington Ins. Co. (133 N. Y. 
365. 31 N. East. Rep. 31. 21 Ins. L. J. 650) it was held:— "Insured is bound 
by limitation on agent's authority as imposed by the New York standard 
form ; after issue and acceptance of the policy waiver can be evidenced 
only in writing as prescribed, unless pow r er of agent as expressed in the 
policy has been enlarged by usage of the company, its course of business or 
by its consent express or implied. Immaterial whether the insured has 
read the policy or not." 

In Gould v. Dwelling House Ins. Co. (90 Mich. 302. 21 Ins. L. J. 328) 
the Supreme Court distinctly says that "a provision plainly printed upon 
the face of the policy, that no officer, agent or other representative of the 
company shall have power to waive any of its provisions, is valid and bind- 
ing on the insured. ' ' 

Again we find a New Jersey decision as follow r s: — "Clause in policy 
providing that waiver must be in writing by officers, and no agent has 
power to change or alter terms, etc., applies only to those conditions which 
relate to the formation and continuance of the contract, and not to conditions 
which become operative after a loss and precedent to right to sue." (Car- 
son v. Jersey City I. Co.) 

The State of New York also comes into line, its Supreme Court deciding 
that "the President of an insurance company, as such, has no power 
to dispense with the condition of a policy." (McEvers v. Lawrence 1 Hoff- 
man Ch. 172 N. Y. ) 


As we are aware, Minnesota adopted the standard form of policy exact- 
ly the same as New York, and the Supreme Court of that State agrees 
with the decisions already quoted, for in the case of Wilkins v. State Ins. 
Co. (43 Minn. 177, 20 Ins. L. J. 478) we find the following language :— 

"Waiver of a condition in a policy of insurance by a local agent, where 
the policy itself provides that none of its terms can be waived by any one 
except the Secretary, is not valid, as the policy is notice of his lack of author- 
ity to make the waiver." 

Agents say: "If it is right for the insured to waive cancellation it is 
right for the company to do so also." To this we w^ould say that the 
assured acts for himself, and is the principal to the contract he makes, and 
he cannot under any circumstances lose more than the amount of his return 
premium at the time he desires to cancel. On the other hand the agent 
makes contracts for companies which limit his agency authority, and, were 


he permitted to estop the company from revoking its contracts at pleasure, 
the damage to the company would be incalculable. 

How can the company's right to cancel be waived ? Only by the action 
of its board of directors. 


How does the non-cancellation clause effect reinsurance policies? If the 
reinsured company has in its policy a waiver of the insured's right to re- 
turn premium, does such waiver apply as between the companies, under the 
reinsurance clause which reads — "this policy is subject to the same risks, 
valuations, conditions and endorsements, etc., etc."? Instances have 
arisen where the reinsurer refused to pay the reinsured company its pro- 
portion of return premium on the conditions above stated. This seems to 
be an error, for the reinsured company, by paying the assured a return 
premium, waived the non-cancellation clause, and the reinsurers being sub- 
ject to the same conditions, endorsements, etc., must pay their proportion 
of return premium. 

The double-edged part of the agreement being illegal and void, cannot 
bind the reinsured company, much less the reinsurer. 


The Chairman — It is quite evident that Mr. Thornton has given 
very careful consideration to the subject under review. We have 
all had our trials with relation to these non-cancellation clauses. I 
presume we have most of us taken advice as to the legality of the 
same, and I think it would be in order for some of the gentlemen 
present to relate some of their experiences upon the subject, during 
the recent demoralization. Mr. Grant, will you give us the benefit 
of your ideas'? 

H. M. Grant — My ideas are simply in common with all, that we 
will simply abide by the non-cancellation clauses. I think there is 
a great deal of meat in Mr. Thornton's paper, and I think he is 
quite right. I would say that it is only by grace that we respect 
that non-cancellation clause. A company agrees not to increase the 
rate, and the assured agrees not to cancel, in consideration of the 
low rate given. That is exactly what is arrived at by the non-can- 
cellation clause or agreement. In some degree it gets around the 
waiver clause. We say to the insured, ''For a low rate, and in con- 
sideration of this, we do not want you to go afterwards to some 
other company. -' He, in return, says, "Very well; don't you in- 


crease the rate. " We enter into a mutual agreement therefore, 
which is not contained in the printed contract. I think really that 
is the only form of cancellation clause that we should use: simply 
that in effect •* We will not increase the rate, and you, in return, 
will not ask us to take up this policy, and take another in another 
company, which will underbid us.'' I am not prepared to say that 
such a form of non-cancellation is not still within the arguments 
suggested by Mr. Thornton's paper. 

, Mr. Argall — I recently took occasion to speak to an attorney 
and asked him whether we could cancel a policy containing a non- 
cancellation clause for non-payment of premium, and he told me 
that, in his opinion, the only way to cancel would be to pay assured 
the return premium, which would have been recoverable, had the 
original premium been paid. 

Mr. Thornton — I think our law is very clear on that point. I 
don't think there would be any difficulty in cancelling the policy for 
non-payment of premium due, even though that clause were in the 

The Chairman — I think he must be in the position that he was 
prior to the interpolation of the subsequent agreement. I think the 
insertion of that clause makes no difference, as to the legal power of 
the company to cancel for non-payment of premium. We have had 
various clauses presented to us, and some of them doubled-headed, 
which gave everything to the insured; but the one which met the 
approval of the proponents of the question was the one that provid- 
ed that, in consideration of the reduction of that rate, the insured 
should not cancel the policy, nor should the company increase the 

Mr. Argall — It seems to me you are going round the point, and 
allowing the company to say whether the contract is a live one or a 
dead one; and the point of my legal friend, that you waive your 
right of doing that when you give credit under a policy containing a 
non-cancellation clause as against the company. 

Mr. H. M. Grant — I think the clause which is generally accepted 
is that the company agrees not to cancel this policy except for 


increased hazard; and in case of increased premium, the insured does 
not waive his right to cancel, where you increased it without there 
being- any increased hazard. There was one form in use, that we 
agreed not to increase the rate; the consideration would be that the 
assured agreed, in consideration of the reduced rate of premiun, not 
to cancel his policy; or, still better, that he waives his right to 
return premiums, and that the company agrees that they will not 
increase the rate. All the insured wants to know is that the com- 
pany will not increase the rate. But if the company say they will 
not cancel the policy, except for increased hazard, it seems to me 
that ties the policy up. The point still has to be tested. 

The Chairman — I can see that I misstated the general disposition 
on the part of the fraternity in the matter of the application of this 
non-cancellation clause. Mr. Grant has expressed the views that I 
meant to convey absolutely. I did not intend to convey the idea 
which I did, that a double-headed cancellation clause was acceptable. 
I did intend to convey that the companies seemed to prefer that 
clause, which provided that the assured, in consideration of his 
reduced rate, should waive his cancellation, and that the companies 
should not increase the rate, except when additional hazard was 
added to the risk; not that the company waive the right of cancel- 

Mr. Thornton — Although they may waive their right to cancel- 
lation on account of increased rate, I think the assured can cancel it 
without giving any reason. I think there are a number of decisions 
sustaining that theory. 

Mr. Folger — Mr. Thornton's legal decisions are given in full, but 
I do not think the position which he takes is sustained, except in 
one or two States that he names specifically. The impression I have 
is, that the courts of last resort in those States have been very 
strong in sustaining the policy as originally written; for the reason 
that that particular policy form — the New York standard policy 
form as it is called — is a part of the statutes of those States. Whether 
the assured have read the form or not, it is part of the law of the 


state: and this being so, it is impossible to waive the provisions of 
that contract as the provisions of ordinary business contracts are. and 
may be, waived. I am of the impression that on careful search we 
may iind that the decisions of those States are of somewhat different 
character from those we have in California. Where a clause is 
inserted agreeing not to cancel the policy except on certain con- 
ditions. I have serious doubts whether that policy could be cancelled 
by a company in this State contrary to the agreement. 

Mr. D. A. Spencer — I know we had a case decided by the Supreme 
Court of Oregon last year, in which the Supreme Court says in 
terms, as I understand it. that the agent of the company under the 
New York standard, cannot waive the conditions of the policy: that 
he can go no further than the power granted him by his commission, 
and the conditions stated in the policy. 1 think that is the condition 
in one of the States. 

The Chairman — Your contention bears out the views of Mr. 

Mr. Gilcrest — I believe the usual form that has been used for this 
non-cancellation is where the company agrees as follows: "'And 
this company hereby agrees not to raise the rate unless they increase 
the hazard." That says nothing about the right to cancel, and we 
still have the right to cancel for any reason that we see fit, and that 
is the form that we have used, and I believe it is the form generally 
used, which does not interfere with our right to cancel. 

Mr. Kinne — I understand it that the agreement on the part of 
the insured is that he will not cancel because he has obtained the 
goods below cost, and it is a moral obligation on the part of the 
company, that they will not raise the rate. 

The Chairman — We will now proceed with the reading of the 
next paper on the programme, entitled "Inspections," by Mr. J. H. 
Morrow, which will be read by Mr. L. A. Wright. 

(Mr. Wright here came forward and read Mr. Morrow's paper, 
which was received with applause. ) 



Quantity without quality would be a poor investment for an insurance 
company. For the time-being luck might be on the side of quantity, but 
for the time-being only, if even so long. The company which resolutely 
subordinates quantity to quality is sure to be the gainer in the long run, 
and it is in this respect that the special agent, in the performance of his 
field duties, can render his company signal service. Upon him devolves the 
duty of inspecting the business upon the company's books ; how in a general 
way he shall discharge this duty is the theme to which I invite your 

Inspecting, without doubt, is the most trying regular duty which the 
special has to perform. But there should be consolation to him in the 
knowledge that in no other direction can his services be made to prove 
more profitable to his company. When it is remembered that a single loss 
may more than wipe out the premium receipts from an agency for an entire 
year, the elimination from the books, through his efforts, of an undesirable 
risk is of much significance. Instances are numerous of specials having 
averted heavy losses by the cancellation of policies on property which on 
inspection proved hazardous beyond correction. 


I have used the phrase "hazardous beyond correction" advisedly, for I 
do not wish to convey the idea that the sequel of the condemnation of a risk 
should necessarily be cancellation. Indeed, cancellation of a policy should 
be the last resort, and should indicate either conditions beyond immediate 
and satisfactory remedy, or unwillingness on the part of the assured to 
comply with proper request for improvement. While there should be no 
temporizing with danger, it should be borne in mind that premiums come 
too hard to be arbitrarily relinquished ; certainly, if without jeopardizing 
the interests of the company they can be retained by appeals to the com- 
mon sense and business prudence of the assured, every effort to that end 
should be put forth. It would be a most unfortunate thing for a special to 
labor under the impression that evidence of his zeal in making inspections 
depended upon the number of cancellations reported by him. The power to 
cancel involves great responsibility. It should be exercised intelligently 
and discriminatingly, but most certainly exercised whenever there is an 
honest doubt as to the advisability of continuing insurance on a given risk. 
The controlling aim of the special in inspecting the business of an agency 
should not be what short-comings he can report to his manager in evidence 
of his earnestness, but rather what degree of security his company's busi- 
ness is left in as the result of his labors. Security is the one thing to be 
sought, and if a special can conscientiously and intelligently O. K. every 
dollar of liability in an agency he is rendering his general agent and his 
company the very best possible service. 



Thus far I have had little to say respecting, the local agent, but it is not 
because he does not count as a factor in the inspection problem. Indeed, he 
counts as a very large factor. As to his efforts the company is chiefly in- 
debted for the business upon its books from his locality, so upon a continu- 
ance of his good will and zealous representation must the company depend 
for future business so long as he holds its commission. Hence, for the special 
to ignore the local in making inspections, or to wound his pride by injudi- 
cious criticism or reckless condemnation, would be to commit a serious and 
perhaps irreparable blunder. The local should feel, and, if he does not so 
feel, should be made to feel, that he is as truly and dignifiedly a represen- 
tative of his company as any one connected with it, and so being he should 
be treated with the respect due one in his responsible position. He should 
understand that the special's inspections in no sense partake of the nature 
of espionage, but are in keeping with a business system which affects all 
localities alike ; that his hearty co-operation is as earnestly desired in a per- 
sonal examination of the business he has written as it was in first securing 
it; that the special's visit is as much in the line of consultation as of genial 
but business-like supervision. It never does for the special to act upon the 
assumption that he knows it all; however, should he discover that knowl- 
edge lies largely on his side, he will be wise if instead of revealing his 
discovery he quietly enters upon the task of imparting information that 
may subsequently bear good fruit to the company by the local's avoidence 
of past mistakes. 

There are local agents in whose presence many a good special might 
stand with uncovered head. I have in mind a local who, until he decided to 
go into business for himself, was a most successful special. To-day he not 
only controls a handsome business, and has a goodly competence, but is a 
man of marked scholarly attainments. Yet so unassuming is he, so modest 
in his references to himself, that a special new to his field might easily 
underrate his abilities, and possibly be led into an arrogant assumption of 
his own superiority. Should such a thing happen I question what would be 
the result. But with all this local's experience I can safely say that I know 
of none who has on every occasion more graciously and earnestly co-operated 
with me in inspecting business in his own territory. We meet on terms of 
confidence, and I trust of mutual respect. Indeed, I do not hesitate to say 
that I have never visited his agency without going away from it richer than 
I came in respect to practical knowledge. 


I might enlarge at this point upon the importance to the special of 
preparation through observation and study for the work of inspection. Ex- 
perience in connection with the work will help out largely in this direction. 
Yet there is nothing like giving the subject consideration in season and out 
of season, as can be done by observing new methods of building, examining 
advanced processes of manufacture, investigating the latest way of housing 


stocks of merchandise, and carefully reading the newspapers which can 
always be depended upon to keep in touch with the progress of the age. 

When the special goes forth to inspect he must to a degree assume the 
functions of an expert, and should be able to speak " by the card." Jn ex- 
pounding the law, as he passes upon physical qualities or interprets the 
policy, he must be sure that he does not bring the law into disrepute by 
hastiness, carelessness or ignorance. 

There are certain indirect results of inspection which may be briefly 
touched upon. First is the increased confidence of the assured in the com- 
pany whose policy he holds. But to this end the assured must be properly 
approached. He must be made to realize that as his interests and those of 
the company are practically identical, so an inspection is equally to his ad- 
vantage. I recall one case in particular where the owner of a large stock 
of goods was so pleased with the attention given his premises that he 
doubled the insurance he carried in the company represented. For he rea- 
soned that a company so careful before a fire would be found not wanting 
in event of loss. A second indirect result is the advantage to the com- 
munity in the improvement of the fire hazard effected by the carrying out 
of suggestions as to the removal of rubbish, the alteration of buildings, and 
the introduction of means of fighting flame. The safety of an entire town 
may be involved in the inspection of a single risk. Who is to know this ! 
Certainly the thought of such a possibility should solace the special, as, 
after a day of wearisome inspecting, he at nightfall prepares to wash the 
grime from his hands and brush the cobwebs from his clothes before sitting 
down to dinner. 


Before concluding a paper which I am afraid has been devoted too 
largely to truisms, I wish to say a word about inspections in relation to 
determining values. The moral hazard which lurks in over-insurance need 
not be especially dwelt upon. Over-insurance means temptation when 
broadly considered, and on general grounds and as a business principle is 
most sedulously guarded against by all companies. Yet instances of over- 
insurance occur in spite of every precaution, and without intentional disre- 
gard of principles on the part of the local. All underwriters know how 
prone human nature is to unconsciously over-estimate the worth of its own 
possessions; thus the judgment of conscientious locals may be imposed upon 
by the inflated statements of honest but bumptious applicants for insur- 
ance. And if over-insurance may be the result of statements made from a 
false sense of pride, how easily it may sometimes be effected through ignor- 
ance or design on the part of the assured. In detecting this over- valuation, 
and reducing the insurance below the danger line the special has an oppor- 
tunity to prove himself most servicable. But even if there were no moral 
hazard involved a company owes it to itself to endeavor to see that the 
premium holds an honest relation to the value of the property insured. 
Certainly, nothing is more painful to a company than, in case of a total loss, 
to find that its policy is out of proportion by reason of excessive valuation. 


Every act of the special which tends to save his company from avoidable 
loss, or to advance its reputation for honorable dealings in the eyes of the 
community, is in the line of duty, and in inspecting he certainly has brilliant 
opportunity afforded for compassing these ends. 


The Chairman — Gentlemen, Mr. Morrow has treated a rather 
hackneyed subject with originality, and I trust that those present 
who care to speak on the subject will not hesitate to give their 

Mr. Farnum — About four years ago, when I was new in the busi- 
ness — for I am not as old as 1 look — at which time I was very green, 
I recollect an occasion when our company sent me up to Copperop- 
olis to inspect the risks which we had in that towm. I arrived there 
about five or six o'clock in the evening, after a hard day's drive, and 
went to the hotel, where I found very poor accommodations. The 
ceiling was lined w T ith cloth, and it wafted in the wind. I went to 
bed by the light of a candle, and there was much noise in the hotel 
that night by drunken men: probably miners working in the mines 
there. When I went down stairs in the morning I told the landlord 
I would like to see his policy. He had about five thousand dollars 
insurance, at about four per cent., and I finally mustered up courage 
enough to take up his policy and cancel it. I wrote the company, 
advising them that the risk was a very bad one. On my arrival at 
Sacramento, after leaving Copperopolis, I picked up the paper and 
saw that a fire had occurred in the latter place. On reading the 
account of it, I found that all the risks which we had in the town 
had burned up, except this hotel; and I believe that that building 
still stands. (Laughter.) 

The Chairman — Mr. Andrew, you are an inspector of some exper- 
ience, won't you give some of your experiences? 

Mr. Andrew — I don't recall anything of interest. I think that 
all men who have been on the road have had similar experiences to 
Brother Farnum 's. Sometimes you get the wrong one and some- 
times you get the right one, but I think you can never go wrong in 


cutting off hotels like that Mr. Farnum speaks of, even if it does 
not burn down. 

Mr. Sexton — Mr. Chairman, in the old times, when inspectors 
were supposed to look into backyards, down stove-pipes and in ash- 
barrels, I went through Salt Lake, and among other buildings I 
inspected the Wahsatch building. The rate was only three per cent, 
at that time. There were timbers in that building, under the roof, 
large enough for a massive ship. I had the policy on that building 
cancelled, and we have lost nothing on it since, except the premiums 
for about twenty years at three per cent. 

Mr. Gunnison — My experience has sometimes called out profanity 
from the insured. I remember one occasion when I went to examine 
a planing mill, and I said to the owner, "I think that smoke-stack 
is very dangerous." He said, "What do you mean, sir? " I said, 
" Well, that may set your roof afire some day. It is a little too near 
the shingles, in my opinion." He said, "I don't want anybody to 
tell me about my business. I think I know my business myself." I 
said, "Very well, but look here: It is my opinion that that roof has 
been afire already, and you did not know it. It looks to me as if 
those shingles had been charred, and if I am not mistaken there are 
ashes on the edge of that smoke-stack. " He got red in the face, and 
became angry; but he at last concluded to go up there. He obtained 
a ladder, went up and took hold of the shingles around there, and 
sure enough, they crumbled up in his hands; and he said, "Well, I 
will be damned! " 

Mr. Andrew — I now recall that I was in a town where lumber was 
high; rough lumber was worth $50 a thousand, and finished $90 per 
thousand. There was a great deal of cotton lining to rooms. I had 
one risk there, that only had thirteen stoves-pipes; some through 
windows, some through walls, and some through the roof. It was 
a large lodging house, and I think that many of the members of 
this Association have slept there. It was known as Mrs. Knight's 
lodging house. There was not a room with a board partition, it 
being cotton lined, and ceiled throughout. It eventually burned 


down, but arson was committed in order to get it to burn, so I do 
not know that inspection would have done any good. 

Mr. Mel — I have often visited the house spoken of, and on one of 
my visits there, I found another house on which I canceled the pol- 
icy, and when the next fire occurred it was left standing. 

The Chairman — There is no doubt that we have all had such ex- 
periences, and we have canceled dubious risks which are still stand- 
ing to-day; but on the other hand, we very often O. K. risks which 
are the subjects of demoralizing fires within a very short period. I 
remember that during the conflagration, or after the conflagration 
at Bozeman, having settled one of the losses at that fire to the satis- 
faction of the local agent, he endeavored to show some appreciation 
of the way in which I had dealt with his patrons, by giving me a 
fine risk. A livery stable had been erected there, and he said, 
"Come around; I have got a nice line for you." I went around to 
the stable and found all apparently O. K. I insured the building, 
the hay, the horses, the wagon and the harnesses, and I went away 
thinking I had secured a very fair risk. My next stopping place 
was Missoula, and upon my arrival there, I found a telegram await- 
ing me, to the effect that the risk had burned, and asking me to 
return immediately to adjust the loss. As a matter of fact, our loss 
papers were received by the office at the same time as the daily 
report. So while of course there can be no under-estimate of the 
value of inspections, the conclusions that we arrive at may not 
always come to pass; at all events within the period of time that we 
give them. 

Mr. Devlin, is down on the programe for the next article. In 
consequence of his inability to appear this afternoon, we will pro- 
ceed with a paper interpolated by E. Niles, to be read by Mr. George 

Mr. Grant — I have been asked to read a paper, "Thoughts of a 
Hired Man, ' ' written by Mr. Niles, and I willingly comply, for we 
all know that Mr. Niles never wrote a dull word. He has a happy 
way of expressing himself, and he has a capacity of thought which 


makes his papers always interesting*. (Reads paper of Mr. Niles, 
which was received with loud applause. No remarks. ) 


[When the honorable President of this Association stopped me on the 
street a few days ago and calmly informed me that I was expected to write 
an "article" to be read at this meeting, I told him that I didn't keep essays 
on tap, and that thought and study were needed, winding up with the 
usual excuse that I didn't have time. He replied, "A man can always find 
time to do anything he wants to," and added, "it is a duty!" That shed a 
new light on the subject and, being a slave to duty, I have hastily written 
a "few, unconsidered trifles" with the understanding that this is not an 
oration, sermon or anything more than the crude ideas of a plain, ordinary, 
hired man, put down on paper on the Sunday before the meeting, and as 
much below the level of a regulation "article," as the present rates are 
below the tariff of the good old days of yore.] 

The past year's operations in fire insurance on this Coast, and especi- 
ally in California, come under the head of profane history, judging from the 
free "cussing," verging at times on the picturesque, that has been in- 
dulged in by managing, special and local agents. As a relief to this dark 
and unholy background, the smiling assured cheerfully pocket their return 
premiums and join in the Shakesperean chorus: "What fools these mortals 

Turning to sacred history, we are told that Solomon, reputed to have 
been the wisest man in the world (notwithstanding his extravagant ideas 
about the fair sex), in an age which knew nothing of electricity, cathode 
rays, the carbolic cure for consumption, compacts, kinetoscopes, and other 
dazzling discoveries, said "there is nothing new under the sun." If that 
venerable polygamist were living in this age he would probably be the 
president of the Jerusalem and Jaffa and Bethlehem Assurance Company 
Limited, and would recognize the newness of things by writing all of the 
synagogues in Palestine for three years at a sixty per cent, discount. 

When the loaded elevator stuck midway between the third and fourth 
stories the ambitious amateur elocutionist at once said : " I will take advan- 
tage of the accident and will now recite 'Curfew shall not ring to-night !' " 
This seems like a similar opportunity of which I gladly avail myself for 
making a few queries and venturing a suggestion or two. 


Of what use is this Association with its garnered wisdom, the fruits of 
twenty years' harvests, if it is to represent a business that cannot be run 
on business principles ? Why are its meetings continued, and why do its 
members rack their sweating brains with the problems of lines, limits, 
adjustments, collections, forms, and all of the other details, if we are simp- 


ly to be shipwrecked passengers on a leaking craCt that once, with a sound 
hull, with wisdom at the prow and common sense at the helm, smoothly 
glided over a prosperous sea ? Without any decided batrachian preferences 
I think "I would rather be a toad, and feed upon the vapors of a dungeon," 
than to always lead such an unsettled life. 

If through the ambition, bad faith, vacuity or obstinacy of sundry and 
divers persons, concerning whom further the affiant sayeth not, the present 
demoralization is to continue, the sooner this society is disintegrated into 
its individual elements, the better for its members. 

In that entertaining work, " The Curiosities of the Law," an exact 
copy of an affidavit is given in which the plaintiff says that, on a certain 
occasion, the defendant then and there said that he would "kick the said 
deponent to hell, and the deponent believes that he would do so." If the 
managers propose to continue that lurid kicking process as against the busi- 
ness it may be well for the rest of us who are left in the thinned ranks to 
gracefully withdraw before the Tartarean fires become our lasting portion. 

However, "though plunged in ills and exercised in care, yet never let 
the noble mind despair." 

Notwithstanding the vast losses caused by the break, it will be unfair 
to treat the subject with bitterness, and any recriminations will be ill ad- 
vised. The cloud may have a silver lining, though at present prices there 
wouldn't be much in that, but, at any rate, there are lessons that have 
been painfully learned that in time may recoup all of the losses. 

As there can be no effect without a cause, this hard experience has 
caused many to think w T ho never thought seriously before. So far as the 
managers are concerned, it is only fair to say that they have had to deal 
w T ith problems so complicated that an early and correct solution might 
puzzle a Newton or Laplace, and when the requirements in some cases have 
been to figure out a profit where the losses and expense ratios apparently 
exceeded the income, the enormous difficulties of their position will be 
evident. It appears that there are some managers who really believe that 
their companies are willing to continue the fight for an indefinite period on 
the principle that "we can stand it as long as they can." That may be 
true, but the expression savors more of bravado than of common sense. 
And there is always the possibility of some hard-headed Yankee or British 
director arising at a board meeting and saying: "Mr. President, or Mr. 
Chairman, I notice we are losing money on the Pacific Coast right along, 
and I move we reinsure and withdraw." 

On the other hand, it must be remembered that, for all we know, there 
may be instructions from home offices so imperative and even snappy in tone 
that the patient manager or general agent must follow them exactly, even 
if agaiust his ideas of justice, if he w r ould "hold his job." Well, all of the 
hired men want to hold their jobs, don't they, especially in times like 

"that tired feeling." 

It is unnecessary and even unkind to call attention to the figures of the 
Coast business of the different offices for last year. Guarded as our coun- 


tenances may be, it is impossible to avoid smiling over some of the statis- 
tics, while others cause that "tired feeling-," especially when we consider 
the appalling increase of liability and the shadowy enlargement) of income 
in a few scattering cases. But why harrow up feelings? Let the dead past 
bury its dead and let them stay buried, if they will, until the long term 
policies expire. 

By the way (and this is merely the suggestion of a laboring man), if 
the Monterey excursion fails to entirely fulfill its promise, I, for one, am 
willing not to refer to all of those good dinners, provided the local and 
special agents be given an equal chance to show what they can do. A com- 
mittee of forty, say, made up of twenty locals and twenty specials, private 
car of course ; Echo Mountain or Coronado ! It would be an innovation, but 
there's no telling what short, sharp and decisive action would be taken. 

This thought I would merely throw out and let it simmer. 

The surprising feature of last year's business is the fact that there 
were not more fires, for never was a business more recklessly done. Long 
shots were freely backed and desperate chances taken. While there is no 
doubt that the so-called common people of this country are much in advance 
of the peasantry of Europe in education and intelligence, the fact remains 
that there is a stratum of ignorance that seems impenetrable on some 
points. Many insurers in the rural districts seem to have the idea that, 
owing to the cut rates, they are likely to be scalped on adjustments, and, 
consequently, they have been more careful not to burn. This is a strange 
anomaly, but true. This condition cannot last long, so may not be reckoned 
as a permanent factor. 

The Italian proverb has it that "no flies get into a mouth which is tight 
closed," but at the risk of being bothered with flies I will venture a few 

Whatever plan may be first adopted for the future conduct of the busi- 
ness, eventually these points must be recognized : 

"WE don't know it all." 

We are clever people, but we don't know it all, and we can still learn 
from the Eastern men. I once thought that the Coast managers were the 
wisest insurance men in the world. They are, with few exceptions genial, 
charitable, well-equipped men of affairs, and if in the broader Eastern field 
would soon be among the leaders there, but their territory is narrow, in a 
sense of income and diversified hazards. There are Eastern methods that 
might be adopted on this Coast to our advantage. Our system of schedule 
rating was a great advance over former methods, but now it's not up to 
date. I am not sure but Moore's Universal Mercantile Schedule would be 
more equitable. Our system depended too much on the judgment of sur- 
veyors. The new compact must n' t attempt too much. The Pacific Insurance 
Union had a constitution so fearfully and wonderfully amended, with such 
a plethora of rulings announced by circulars to agents, that I doubt if Mana- 


get Stillman himself knew where he was on some points until he got out 
the bound volume of circulars and read them all over carefully. His prede- 
cessor, I am sure, has forgotten some of the rulings. 

The new board must eventually recognize the fact that agents know 
something and wield a vast influence. The poor local mustn't be sat on too 
hard. You may knock him down but don't kick him on the forehead. If a 
manager deviates from the law, punish him just as quickly as the local 

Managers under the new system, it is hoped, will instruct their special 
agents to be thorough and diligent in their efforts to get business, but not 
to speak ill of their neighbors. There should be no damning with faint 
praise nor disparaging remarks made about local, Eastern or foreign com- 
panies. Adjusters may only criticize their own adjustments and are to 
keep their hands off of other people's settlements. 

In short, we must all be faithful, forbearing and follow the Golden 

Recently I had (not by request) a dream. It is not very long. It was 
so vivid that I awoke with a shudder. Sometimes I'm afraid it may prove 


On that rainy Sunday last January I was on the box seat of the stage 
coming from Lakeport. There was no other passenger. Watson was driv- 
ing. Dry Creek, near Highland Springs, was a misnomer, for that day it 
was a raging torrent. We attempted to ford it, sank into a chuck-hole, and 
the stage tipped over. The driver and I were buckled in under the apron 
and nearly drowned right there. The panorama of my life didn't pass 
before me, so I concluded I wasn't done for then. My first thought was: 
"awfully cold;" the second: "this gives me the pneumonia." It did. We 
got dry clothes at the Springs and came on to Pieta. There I was taken 
with a severe chill and knew what was coming. I got home as soon as 
possible, but when I arrived at San Francisco I was a very sick man. It 
seemed to me that I lingered for several days, gradually growing weaker. 
I heard my wife and children sobbing at my bedside and remember that 
when the doctor said : "Hush, he's going," I thought, "if this is dying, it's 
easy." I tried to speak and then there was a blank. 

After what seemed a very long interval I found myself wandering on a 
plain, in a dazed condition, but otherwise I felt just as I did on the other 
shore, and I thought, "Well, I've crossed the river and 1 don't seem to be 
either a seraph or a demon; what next?" Suddenly I seemed to be just 
before the gleaming walls of what I believed to be the Celestial City. This 
looked promising, and I stepped timidly up to the main entrance. Even 
then, with all my fears, I couldn't help admiring the pearly gates and the 
graceful curves of their portals. Strangely enough, my old ideas were still 
with me, and I thought, " what a superb risk at one per cent, for three 
years." I felt a presence, and looking up saw a tall, handsome young man, 
clad in flowing robes that glittered like old mine diamonds. 


"Stranger," he said, in a voice like honey, " what is your will?" 

" May I ask your name V\l said. 

ki They call me 'Peter,' " he replied. 

"Just the man I was looking for," I said, " but I had been led to believe 
that you were very old, with spreading wings, something like the almanac 
pictures of 'Father Time.' " 

"We are all young here, and have no use for wings," he answered; 
"our thoughts move us, and they are quicker." 

" Shall I go in now? " I asked. 

He smiled. There was something so genial and human about Peter 
that I liked him. 

" What was your business? " he asked. 

"Insurance," I replied. 

"Life, fire or accident?" 


" It might be worse," he said, " There are no life men inside and very 
few accident. Where from? " 

" California." 

"That's bad. You can't go in now. May be in one or two hundred 
years you may work up to it. Come ! " 

I shuddered, but I went. The scene changed, oand my guide and I 
seemed to be in San Francisco. We appeared to be on California street first, 
and then on Sansome. 

"Surely, I can't be mistaken; " I said: "this must be San Francisco; I 
am certain of it." 

Yes, there they were, the old, familiar streets, up and down which a 
mob of wild-eyed men, with underwriters' badges on their coats, were 
rushing to and fro, waving their arms and shouting wildly : 

"I'll cut it fifty and write it for three years ! " 

"Here's your return premium, sign the non-cancellation clause right 

" What discount am I bid for this school-house? Fifty ! who'll say sixty? 
Sixty! who says seventy? Eighty! Eighty-five! Done at eighty-five." 

" Who are these blithering idiots, Peter, and what are they trying to 
do?" I asked of the saint, and yet their wild shouts seemed to dimly recall 
similar scenes from my earth life. 

"They're working out their salvation," he said, "doing penance for 
their sins; laboring hard for nothing; building castles and tearing them 
down, and blowing bubbles that vanish into thin air. Here's where y&u 
will have to stay for a time." 

"But, Peter," I implored, "my kind friend Peter, don't leave me in 
this dreadful place. Can no one use influence to get me into Heaven \ I 
understood tYiex could." 


"Influence doesn't go," said Peter; "nothing but conduct and character. 
No one can help you but yourself. I thought I had a pull, but on account of 
that little affair of mine, when I cut off the Roman soldier's ear, they kept 
me for many years outside slicing off phantom ears until I got civilized. 
Well, good-bye." 

" Peter, donH leave me ! " I cried, in an agony of apprehension : " What 
dreadful place is this, anyway?" "This? O, this is hell! " said Peter. 

I awoke trembling in every nerve. 


President Driffield being- obliged to absent himself, Vice-Presi- 
dent Folger took the chair. 

Mr. Folger — We will now have the pleasure of listening to the 
reading of a paper written by Mr. McVean, on "Individual Benefit 
to be Derived from the Association, " which will be read to us by 
Mr. Farnum. 

Mr. Farnum — Gentlemen, a very pleasant duty has devolved 
upon me, which is the reading of a paper by Mr. McVean of the 
Transatlantic. (Reads, and the paper is received with applause.) 

TION. ■ 

My subject is not one that calls for deep thought, nor any array of 
figures, and I can only make a few suggestions, directed mainly to the 
special agents, which, if carried out, might be of very considerable benefit 
to our Association and to ourselves individually. 

Large bodies, whether political or commercial, have never been suc- 
cessful in their object, without thorough organization, and system, and 
much depends on the latter. 

Our Association differs materially from these. We have our organiza- 
tion, but we may say we have no well-defined system of work, so that any 
benefits to be derived from our Association must depend upon the voluntary 
individual action of our members. There are three points that appear to 
me to be the hinges upon which the success of our Association must turn, 
viz : Attendance, active participation, and social intercourse. 


1st. There are many questions that come up for consideration in our 
meetings that are vital to the business of underwriting — questions that we 
should familiarize ourselves with so that when we are confronted by the 
issues in the transaction of our business we may be able to meet them and 
bring them to a successful conclusion. These questions are not only dis- 


cussed at the annual meetings but at the quarterly meetings as well. 
Hardly a day passes but brings to light some new proposition to be digested. 
The consentient opinion upon any question of importance expressed by the 
many, must come very near being the correct one. 

' It is not alone by the interest we take in the annual meetings that we 
will be able to maintain our Association and make it useful, but by attend- 
ance at all meetings whenever possible, and a constant practice and obser- 
vation of methods recommended for the betterment of underwriting, and 
the elimination of the evils and abuses that may enter into our business. 
A good attendance is desirable in order that a full discussion may be had of 
important matters. I am quite sure that the managers appreciate the 
value of the work accomplished by the Underwriters' Association and would 
be pleased, rather than otherwise, if we spend two or three hours together 
each quarter when in the city. 

A full attendance would encourage those members who devote much 
time and labor for the success of the Association. It is an arduous task to 
fill the different positions, and all should contribute in some way, however 
little, to add to the interest of the meetings. It should be our individual 
object to make our meetings instructive and our Association useful to our 
companies — to bend our efforts to obtain good results for the mutual benefit 
of all. 

Our Association is particularly fortunate over others that I know, in 
that we count among our members men who, after years of labor in the 
field, now occupy the manager's chair. Their broader scope of observation 
in the practical working of approved methods make their opinions of greater 
value to the Association. 


2nd. Active participation in the meetings will benefit us personally. 
It will give us confidence in ourselves, and as this grows the confidence of 
our superiors in us will grow. In our position as " specials " we are often 
thrown in contact with the working of the methods recommended by the 
Association, and our experience relating thereto, if given, may be benefi- 
cial to the members as a whole. We should not hesitate to express our 
views upon general matters. We all have our ideas upon the many ques- 
tions incident to underwriting, and the object of the meetings is an inter- 
change of ideas with a view to getting at correct methods. If our idea is 
the right one, discussion will but reinforce our opinion. If it is erroneous, 
discussion will correct it, and we will be benefited thereby. 

We should always keep well in mind the fact, that we do not know it 
a/?, and, if we are afraid of exposing our ignorance upon a question of to-day, 
we will, in all probability, not get at the gist of it. We must often confess 
our lack of knowledge of a subject to get a proper explanation. A business 
is gauged by the ability by which it is conducted, and if by study we help 
to elevate our business we raise ourselves higher in the scale of public esti- 


No mat tor of how little or much importance the question is that is 
being considered, I have always noticed one feature that comes to the sur- 
face, and that is, that some member will relate his experience in a parallel 
case and the result. It is the relation and discussion of actual experience 
that is impressed upon our minds, and makes it instructive and valuable 
to us. 


3rd. It would be very strange indeed if when Ave attend the Associa- 
tion meetings we were not benefited even through social interchange of 
experience. It may be upon the inspection of a certain risk; the adjust- 
ment of a peculiar loss; the straightening out of a tangled agency matter, 
and. in numerous ways, that we may by our experience assist each other 
by valuable information. If we are ever ready to impart useful informa- 
tion, we may be sure that we will receive information in return that will 
be useful to us. If we keep our knowledge to ourselves, lest our compet- 
itors should profit by it, w T e will in time become so contracted in our ideas 
that we will be of no use to our companies, or ourselves. 

The usefulness of a special depends, to a certain extent, upon his popu- 
larity, not only with his corps of agents in the field, but also among insur- 
ance men in general; and, nowhere can the latter be cultivated to better 
advantage than in the Association meetings. His popularity may be the 
result of social qualities, or, on account of his ability as an underwriter, 
but you may rest assured that, coupled with either, is a frank, manly, 
generous disposition to at all times help his fellow-specials solve the knotty 
problems that are always cropping out in our business. 

True, we meet in the hotels and on the trains and compare notes, but 
if we would make it a study to bring up some matter of interest that came 
under our observation during the year, our gatherings would grow in inter- 
est and the benefits we would derive from them would be increased four- 

It has been said that "The world is made up of little things.' ' Let us 
cultivate the little things that are desirable in our business and it will 
help us to solve the more important problems. Introduce new subjects, 
new ideas, large or small, and new interest will be awakened. It would 
appear then, it seems to me, that the individual benefit we may derive 
from our Association depends upon our attendance, active participation and 
social intercourse, and may be much or little, as we may choose. By our 
attendance and active participation and earnest endeavor to assist we may 
benefit much. If we are not interested in the discussion of important 
questions we not only lose much, but I almost believe have not a proper 
appreciation of the fire insurance business. 


Before leaving the platform I desire to offer for discussion, a matter 
that is somewhat foreign to my subject, but I think this is an excellent 
time to bring it up. The question is as to the advisability of having some 


system for the recording of facts in connection with fire losses in our Coast 

You are undoubtedly familiar with "Hine's Register" for record of 
losses, which is beyond question a very valuable feature of underwriting 
in the loss department. I find on glancing over the Register, however, 
that very few losses are reported from the Coast. I believe a record of 
our own would be much more effective. If the special agents and adjusters 
would make a report upon all losses they adjust, and such reports were 
placed before the manager in proper form, what a valuable record it would 
be to them in passing upon daily reports as they come in. In the Herald's 
issue of December 24th, 1895, appeared this item: — 

"The barn of M. Schallenberger, on the Milpitas road, was burned last 
night. Origin unknown. Total loss $1,600. Insurance $1,200. It was 
built upon the site of the old barn destroyed by fire a short time since. 
This makes the fifth fire for Mr. Schallenberger in ten years." 

It is hardly necessary to say that if such a record had been before the 
manager who paid $1,200, for the fifth fire, he would have saved his company 
a loss. 

Mr. Schallenberger, we must assume, is a thoroughly honest man, 
as the article does not state anything to the contrary ; but fire will follow a 
person so persistently at times, that their misfortune makes their property 
a bad risk. We have many losses where investigation as to origin, is very 
unsatisfactory, to say the least. The "suspicious" circumstances are 
known only to the office sustaining the loss, and the claimant has no trouble 
in getting insurance again in other companies, while a record of facts 
would influence the offices to decline to accept further risks. 

D. M. McVEAN. 

The Chairman (Mr. Folger) — As this is the last paper this after- 
noon, I trust you may see fit to act upon Mr. McVean's suggestion. 
It was not so much that a record of all fire losses should be kept, on 
the Coast, as that the losses which are suspicious, or are known to be 
incendiary, should be kept. We are aware that some of the offices 
subscribe to the Record, which does assume to contain an account of 
all such losses. 

Mr. Farnum — In many cases we would find that if Mr. McVean's 
ideas were carried out to the fullest extent so that the companies 
had a special knowledge of two or three fires that were of a sus- 
picious or an incendiary nature, they would have declined to take 
the risk. I think that there should be some way by which all com- 
panies could be posted upon this class of risks. It does not seem to 


me to be a very difficult matter. No special agent adjusts a loss in 
which he discovers that a man has had two or three previous losses. 
but what he reports it to his company: and that information given 
to this society would tend to make our loss ratio very much smaller. 

Mr. Belden— I believe we have to be very careful. Some innocent 
men will be recorded there and they will be black-listed: and I know 
by experience that companies and managers have to be very careful 
in that respect. I would recommend that a better use be made of 
Hine's Record, and I believe that it would fill the bill suggested by 
Mr. McVean. 

Mr. Sexton — This information generally comes to us too late, that 
a man has had four or five fires. It comes when the loss is settled. 
If the information is obtained at first as to whether the man is 
mortgaged more than he is worth, or whether he had a loss before, 
or if any other questions on the application or daily report were 
answered, which answers are deemed unnecessary now. if answering 
those questions could be brought into practice again, it would be a 
good idea. Hine's list merely calls for bad fires or blacklisted fires. 
The stable in the case cited in the paper was owned by a man whom 
we consider one of the best men in Santa Clara county, and we gen- 
erally consider that the fires referred to were caused by the tramps. 

We are getting the notion that we can afford to write anything 
under any circumstances, without paying any attention to values, 
ownership or occupancy, and then depending on the adjuster to get 
us out of bad scrapes. In fact, I think a little more care in under- 
writing would save us very many bad losses. 

Mr. Maris — The gentleman speaks of taking anything without 
question. I was for two years connected with the Pennsylvania Fire 
Insurance Company, and the first instruction I got there was that 
every question on the back of a D. R. had to be answered, and 
there w^as some criticism on my reports, for not having all the ques- 
tions answered; that habit I acquired here in California. 

(President Driffield returned and resumed his chair). 


The President then announced that the committee appointed to 
take charge of the President's address, the Secretary's report and 
the Treasurer's report would consist of Messrs. Rolla V. Watt, C. 
Mason Kinne and H. E. Parkhurst. 

On motion, duly seconded, the Association then adjourned until 
next morning at ten o'clock. 


Second Day. 

San Francisco, February 19th, 1896. 

10 O'CLOCK A. M. 

The Association was called to order at ten o'clock, President 
Driffield in the chair. 

A telegram was read from Mr. Chalmers as follows: 

"The lone representative of the Association now here sends 
greetings with best wishes for successful meeting at the annual 
gathering. When eating his frugal meal to-morrow will think of 
the flesh-pots of Egypt at the Maison Riche. " 

The Chairman — Mr. Argall w T ill now read his paper, entitled 
t; Some Requirements of the Times.'' (Then followed Mr. Argall's 
paper. ) 


Some years ago I remember an old colored preacher notifying his con- 
gregation that on Tuesday night there would be a prayer meeting " if the 
Lord was willin'," but that on Wednesday night there would be a prayer 
meeting " whedder or no." In something the same way President Driffield 
told me I was to have a paper ready yesterday, if possible ; but that I was 
to surely have it to-day, u whedder or no." It is the usual thing- to preface 
these papers with some kind of apology, but in this case I feel a genuine 
apology is really due you, which I offer in advance in deprecation of your 

It so happened that the results of last years business came out better 
than some of us had expected, with an average loss ratio of only 53% — 
which, however, is simply the result of setting "losses paid" against 
" premiums received." If we were to take into consideration that import- 


ant little "joker" in our accounts, the reinsurance reserve, it is obvious 
that the average showing- would not be nearly so favorable, and I think it 
is generally conceded that the current year will iri all probability be a hard 
one for underwriters on the Pacific Coast. It behooves us, therefore, to 
strain every effort towards putting our house in order and to prepare our- 
selves to make the most of every possible opportunity. It is in this spirit 
of provision that the following random remarks are strung together. 


There is no denying that the existence of the present demoralization is 
to all intents and purposes the direct and logical result of the numerous 
inequalities and inconsistencies of rating under the regime of the P. I. U. 
and the Board of Underwriters. In so speaking, I intend no criticism of 
those excellent organizations, since they are dead, and it is well to respect 
the motto: " De mortuis nil nisi bonum; " but I think my point is sustained 
by the extraordinary efforts made, and the extraordinary expense incurred, 
by some companies in pursuit of certain "preferred'' classes of business. 
Such business has undoubtedly yielded a handsome profit for many consecu- 
tive years, and was rightly regarded as being highly desirable, while, on 
the other hand, other classes of risk, having a moral right to insurance 
protection, have resulted in a more or less heavy loss to the companies at 
large. Under a reasonably correct system of rating, such anomalies should 
be exceptional, accidental and temporary, while in our experience they have 
unfortunately been a matter of regularity and common notoriety. In minor 
details the P. I. U. system of rating was good ; but the arbitrary division 
of extensive sections of the country into our four rate-books was too sweep- 
ing and rigid in its effects to recognize the real hazard of individual under- 
writing propositions, and it is right here, at the very basis and foundation 
of the rating system, that the Universal Mercantile Schedule is so effective. 
It would seem the time has arrived for a more scientific apprehension of the 
hazard of individual risks and individual towns. There is nothing in exist- 
ence which covers this ground in the same way as the U. M. S., and it 
would be a step in the right direction if its methods were to be generally 
recognized and adopted. 


That competition, and severe competition into the bargain, will show 
itself under a dissolution of Compact rules is a self-evident proposition. 
Some of the companies, however, have in this respect gone altogether 
beyond the limits of reason, and it would seem the time has arrived to call 
a halt in this respect and regulate our competition on something like ordi- 
nary common sense rules. There is a natural desire on the part of a com- 
pany to place on its books all the good business possible ; but, when it comes 
(as it has come) to reductions of 20 and 30%, and even more on special haz- 
ards and on property in unprotected towns, the thing has undoubtedly gone 
too far. 



You are all aware of the extent to which Lloyds Associations have been 
flourishing in the East, notwithstanding the efforts of the regularly organ- 
ized companies to combat them. There is no reason in law or equity or 
common sense why these associations should not be controlled and regulated 
by the insurance laws, or precisely the same principles as the stock com- 
panies, and it is believed the feeling in this direction back East is growing 
steadily. We are confronted here with the fact that a meeting has just 
been held in San Francisco for the establishment of a California Lloyds, to 
begin business on April 1st, and it may be taken for granted that, if this is 
once launched with any show of success, it will find many imitators at a 
very early date. If the Board of Underwriters is unable to take action 
with the Insurance Commissioner's office regarding the regulation of such 
Lloyds associations from their inception, it seems to me that our Associa- 
tion should step into the breach and appoint a committee to take action. 


It seems to be universally admitted that, with the decreased rate of 
interest on investments and the smaller profit with which investors are 
content, some change should be made in the present charges for term poli- 
cies and that 2>< years premium at least should be charged for three years 
insurance and four years premium at least be charged for a five years insur- 
ance. The present would seem to be a good time to ventilate a reformation 
in this respect. 


In considering the condition and prospects of our business on this Coast, 
I think we should admit that as a rule our tariff rates of premium are high 
enough and that any general increase of them is impracticable, although 
they will of course bear a readjustment. The only means by which a better 
profit can be obtained would seem to be a reduction in losses, and this para- 
graph might very well be headed w T ith the motto "Lower the burning 
line." Many of us do a good deal of talking and writing about the theo- 
retical necessity for legislation, while others take the view that such 
duties are outside the province of an underwriter. Apart from the settle- 
ment of this vexed question, however, it will be admitted that, from our 
very experience, insurance men are best qualified to lead and mould public 
opinion on a question of the kind, and we should bring more prominently to 
the front the important subject of the prevention of fires. The various sys- 
tems of fire inquests have been more or less tested and the results found to 
be excellent, and here again is an opening for an appointment of a com- 
mittee from this Association whose labors would be of the utmost value to 
the insurance companies and the general public. 

Our members, the majority of whom are special agents or adjusters. 
are constantly traveling; they meet town and city and county ofiicials. 
editors, fire marshals and agents, and an assiduous cultivation of so wide a 
field would certainly bring good results. We should regard as a poor phy- 


sician any medical man who simply treated us while we are sick and 
collected his fee without pointing out and recommending the way to health, 
and, while we ought not, in so many words, to admit any measure of 
responsibility for the prevention of fires, I think we should recognize a 
moral responsibility towards educating public opinion. The community at 
large would view with horror and alarm the admission into a city of fever- 
stricken patients, and quarantine officers and others are given full police 
powers to ward off this kind of danger. Is there any reason whatever why 
similar powers should not be given our inspectors to remove arbitrarily such 
indubitable sources of danger as defective flues and stove-pipes, or the 
storage of inflammables which may frequently constitute a serious menace 
to a whole range or a whole block or a whole town I It seems to me the 
appointment of fire inspectors and the establishment of coronor's inquests 
are very similar in character, one being aimed at the moral hazard and the 
other at the physical hazard. 

In this connection, there can be no question that there is room for 
improvement in the supporting of such publications as the Fire Record and 
the exchange as between companies of the invaluable information which is 
already filed and collated in their individual black lists. An incendiary 
will not burn till he has got full insurance ; and, the more widely published 
are the records of incendiaries, the more difficult they will find it to get 
insurance and the fewer will be the fires that occur. 


Among the prominent features of the reports of losses on manufacturing 
establishments is the frequent fact that the presence of a watchman is 
valueless as preventing the fire ; and to this point considerable attention 
has been given in the East, from which we might well take example for 
the Coast business. I will only refer briefly to this matter, as more will 
doubtless be heard of it at an early date. For manufacturing plants in 
operation the old system of employing a single all-night watchman may be 
regarded as doomed, and it is pretty well admitted that the employment of 
one man for over 14 hours, from 5 o'clock in the evening until 7 o'clock the 
next morning, is cruel and inhuman. 

The modern system, as advocated by Mr. Simonson of the Hartford 
Insurance Company, is to employ two men, both capable of working either 
as watchmen or as sweepers or helpers. One begins his shop-work at noon, 
works at sweeping or helping, or whatever it is, until the factory closes at 
night. He then takes a preliminary round to satisfy himself everything is 
all right, eats his supper, goes upon his regular watching rounds until 11.30 
p. m., and is then relieved by the other watchman, so as to reach home at 
midnight. The other man watches until six in the morning, eats his break- 
fast, starts the fires, opens the factory for employes. He then does shop- 
work until midday, and returns home with ample time before him for 
recreation and rest until his duties again begin at 11.30 p. m. Week by 
week the men change their turns. Under this system, it is obvious that 


the watching can be done in a spirit of carefulness and completeness which 
is evidently entirely lacking under the present system, having regard to 
the number of fires which occur in manufacturing establishments while the 
watchman is presumed to be on duty. The few manufacturers who have 
tried the new method speak of it in the highest terms possible, and would 
not under any circumstances go back to the old arrangements; and I refer 
particularly to the matter at this time, as I believe it to be quite a new 
idea on the Coast and one well worth considering. 


Some of the reforms already referred to in this paper may hardly be 
considered as of a very concrete character; and there are liable to be many 
difficulties and complications in carrying out changes in, for instance, the 
mortgage clause, the credit rules, and the like ; and, furthermore, the effect 
of any such changes on insurance interests would be distinctly limited. In 
the subject matter of the present paragraph, however, there is the poten- 
tiality of such a reform as would be of probably greater importance to the 
insurance companies than could be brought about by any other single 
change. I refer now to the propriety of including in every policy : 

(1.) A co-insurance clause for such a proportion of the value as may be 
deemed advisable, with rates fixed in accordance with the percentage of 
such clause. 

(2.) The insertion of either the three-fourths loss clause or a loss clause 
of some other percentage. 

Respecting the last-named clause, I believe the gravest error a com- 
pany can commit is the allowance or encouragement of over-insurance, and 
special attention to this feature of the contract will always have a marked 
influence in lowering the burning line. The principle of placing a check on 
over-insurance has been widely recognized not only by insurance men but 
by those in charge of municipal and State interests. In some States it has 
been proposed to have the Tax Assessor fix the value bej^ond which no 
insurance could be recovered. In other States measures have been proposed 
prohibiting companies from paying over three-fourths of the ascertained 
property loss. The three-fourths figure, however, is unnecessarily rigid, 
and is in many cases unsatisfactory and inequitable, and something like 80% 
for building and 85% for ordinary property might be a fairer amount of 
insurance to allow. 

The complete carrying out of the reform now referred to means of course 
that there would be no salvage to the companies in event of a total property 
loss; but, where a property is nearly or quite burned, we do not really want 
salvage, and with a total property loss there never should be smy salvage 
under a policy properly written. In connection with this we should taboo 
altogether permits for other insurance without limit and the easiest method 
of doing this would probably be by board enactment, prohibiting the approval 
of daily reports without a statement of value and providing that every 
permit for other insurance shall state the actual figure permitted. 


In regard to co-insurance, a subject intimately linked with the fore- 
going, I would uphold the position that any system of insurance which gives 
an assured his full loss is inherently and radically defective, and that public 
policy requires a property-owner to bear a portion of his loss. Co-insurance 
(called by marine men "average") is and always has been an essential 
feature of marine insurance, from which fire insurance sprang. As a matter 
of fact, the fire insurance contracts of almost every country other than the 
United States and Great Britain do contain the co-insurance clause, and it 
has never been clearly or satisfactorily explained why the clause was 
omitted from the earlier English policies and, later, from the American 

Now, there is no getting away from the fact that the less insurance 
carried, as compared with value, the greater is the chance of a total insur- 
ance loss, and the higher should be the premium charged for each $100 of 
insurance written. When we quote the same figure per cent, for a small 
proportionate insurance and a full proportionate insurance we are guilty of 
an inconsistency, which is undoubtedly a very serious source of loss in pre- 
mium income. 

The recognition of the principle of co-insurance is a mutual benefit to 
both sides of the contract, for the insured, by effecting something like full 
insurance, can get the lowest possible rate, while the company has the 
advantage of a decreased liability to total loss and an increased chance of 
salvage. If, on the other hand, an assured is not willing to carry a fairly 
full insurance, he pays a proportionately higher rate of premium for the 
greater risk of a total loss (absence of salvage) assumed by the company. 
The recognized principle of dealing with this matter is, however, not to 
raise the rate in proportion to the lowering of the percentage co-insurance 
clause, but to fix, in the first place, the standard rate to fit the lowest 
possible amount of insurance and then allow a discount for every additional 
percentage of insurance carried. This method does not penalize or antago- 
nize the assured, but puts the thing in the light of a concession to him. 
Everybody admits without question in ordinary business that quotations at 
wholesale can be made lower than at retail, and the allowance of reduction 
of rate for additional percentage of insurance almost invariably impresses 
property owners as being an equitable arrangement, while the public at 
large would resent and criticize the increase of a rate for a lower per- 
centage of insurance carried. 

The question of co-insurance is "as old as the hills," and a good many 
years ago a Chicago underwriter figured out in this connection that the 
insured property of the country was probably covered, on an average, for 
two-thirds its value. He assumed that the average of loss to premiums on 
aggregate results was 60%. If all property had been insured at the same 
rates for its full value, it is obvious that the average of loss to premiums 
would have been only say 40%, as the companies would then have received 
one-half as much premium again as they took in to set against very much 
the same amount of losses. We do not, however, want to allow full insur- 


ance in a general way, and in practice would probably require about 80% 
insurance for small properties and something' considerably more for large 
properties. If, therefore, we can secure an average insurance on all the 
property we write of somewhere between 80 and 90% of the value, the 
result would probably be to reduce our general loss ratio 10%, which 
would be enough to make the difference between an actual loss in our 
underwriting transactions and a very creditable profit. It is unnecessary 
to say that the loss clause should in every case be written for the same 
figure as the co-insurance clause, making one the exact complement of the 

The adoption of co-insurance would practically revolutionize our rates 
under a system the equity of which could not be denied by the most bitter 
opponent of the insurance companies, and I believe its adoption to be the 
most prominent of those latter day questions affecting our interests which 
admit of anything like a practical remedy. 

Times are not very flourishing with Pacific Coast underwriters, and the 
immediate outlook is, in many ways, discouraging. When, however, every 
policy is so written that an appreciable portion of the fire loss falls upon 
the assured, I believe we may consider ourselves within sight of the 
Promised Land. 

As already indicated, my remarks have no pretentions to the dignity of 
a paper, and are simply thrown out in the hope that they may lead to a fuller 
consideration of some of the subjects and bear some fruit in a practical way. 

Respectfully submitted. 


The Chairman — Gentlemen. 1 think you w T ill agree with me that 
Mr. Argall has committed no offense, and that there is no occasion 
for any deprecation of his attempt to confer benefits. Tn my opinion 
the two most important of the suggested reforms are those of equal- 
ization of the rates, and the application of the co-insurance clause. 
but the many other proposed reforms are desired to almost as great 
a degree. I am much pleased to see that Mr. Argall has treated of 
requirements, in his paper, that I locally touched upon in my 
annual address, but they receive at his hands an elaboration which 
it was impossible for me to give. Are there any remarks on the 
paper V (Pausing.) I imagine by the silence that everybody is in 
harmony with Mr. Argall. 

We will now listen to ;, A Talk " from Mr. Devlin. 



I fear, Mr. President and gentlemen, that I resemble the picture of the 
little child and the dog, where the little child looks up into the dog's face 
and says, " Can't you talk ?" lam like the "dog," for I can't talk, and 
besides I have been under the charge of the dentist for the past few days, 
and I hope you will bear with me if I am not distinct enough in my speech. 

It was my intention, as our President knows, to have written a paper 
on the Mortgage Clause, but I found that this would take a great deal of 
time and much research to prepare a paper on a subject so important, and 
this time I did not have at my disposal ; but as I promised to do something, 
your President has held me to this promise much to my regret and I fear, 
gentlemen, to your sorrow. But I am wandering. 

Before coming over this morning I jotted down a few headings on the 
"Detail of our Business," and I will now elaborate a little upon these. I 
intend to address myself more especially to the special agents and to 
those special agents who are not familiar with the detail work in the office, 
and I hope that the managers present will forgive me should I bore them — 
and first of the " daily report." 

On this Coast but little care is given to the daily report, and it is but 
seldom that the questions printed thereon are answered, although of much 
importance. It may be said that we have maps of the towns, that we have 
the commercial reports and Hine's Record to assist us, but there are many 
questions asked on the daily report that are important — some replies that 
are absolutely essential before we can satisfactorily pass the same. If our 
business is merely a gamble, if we are to take in everything that comes to 
the grist, if we are not to separate the wheat from the chaff, it makes but 
little difference ; but if we believe in the principles of underwriting, if we 
are careful, conscientious and painstaking, if we want to know and not 
merely to gfuess, we should require the questions answered, so that we 
may arrive at a more complete understanding of the risk offered. I do not 
believe the questions were printed merely to give work to the printer — do 
you ? — nor as a matter of form. Do you not think therefore that instead of 
telling the agent that it is unnecessary to answer the questions, as I have 
heard some special agents have done, it would be better to explain why 
such questions are asked and the necessity of replying thereto ? It will 
make the agent more careful, too. It will prove an educator, and I hope 
that the special agents will recognize this. It is difficult where an office 
whose methods are methodical, and where it tries to have some sj^stem, to 
use every care, to have other offices or the special agents of other offices 
say to the agent, " We do require such things. It's quite unnecessary to 
reply to the questions on the daily report." So I desire to urge upon you to 
try and have the questions answered, and if your office does not demand 
this do not endeavor to break down the requirements of others. 

I shall now take up the question of inspections. Great care should be 
used in inspecting risks. Too often inspections are made from the sidewalk 

64 A TALK. 

or from a buggy, and I have I regret to say known of cases where they have 
been made from a map taken into a back room. How can any special justify 
such an act ( When the special sends in his survey blank properly filled out, 
the manager believes that the special has personally inspected the risk. 
He must relj T upon his special agent, and it is a satisfaction to the manager 
to have a careful, competent and conscientious special make inspections, and 
when the survey blanks are returned with the approval of such a special it 
must ease the managerial mind. If the special agent is careful in the mat- 
ter of inspection and is thorough in his work, and with this watches the 
causes of fires it cannot but add to his knowledge and it is, I assure you, not 
only a satisfaction but a comfort to the special who becomes a manager, 
and I hope you may all be managers some day, to find that he is personally 
familiar with the risks as the daily reports come in, knows the towns 
thoroughly, their water supply and facilities for fighting fires, the width 
of the streets and the general construction of the places from which the 
reports come, to say "I know that risk, I inspected it, and I am willing to 
pass it." It is a relief, a mental satisfaction, and I therefore urge upon 
you for your own sakes, for the success that must ultimately come to the 
careful worker, to use every care in your inspections ; in fact in all of your 
work, for there is no detail too small to notice. He should not only report 
upon the risk but should endeavor to have the assured improve it. for many 
fires occur through the utter ignorance of the assured as to the cause of 
fires, while the special agent, by his training and education, is familiar 
with it, and most of the people insured would gladly improve their risks 
and lessen the hazard if special agents would point out the defects. 

It is well, too, for the special agent, if he has time, to inspect such 
special hazards as may be in his district, for whether his company has a 
line of insurance or not on such properties, it may be taken for granted 
that if the insurance carried is heavy his company will some day be offered 
the risk. 

The accounts of the agents also require attention. Unfortunately on 
this Coast we have allowed the credit system to grow to such largeness that 
it is almost a Herculean job to eradicate it ; but I sincerely hope that should 
we ever have another Compact organization, that the matter will be taken 
up and that some method will be adopted to lessen the evils now existing. 

The special agent can do much to assist the office in the collection of 
accounts. While overdue accounts should be sent to the special agent with 
instructions to collect the same, I think the special agent should not always 
wait for these — but should of his own accord look over the accounts of the 
agents and make special inquiry in regard thereto, and if he finds the agent 
derelict he should attempt to remedy it without waiting for instructions. 

The manager has many things to look after— much to worry him. A 
good special relieves him of much, and I tell you gentlemen that the work of 
such men is appreciated. The only trouble is that we lose them all too soon, 
for others want them to fill positions of trust, and it is then that we realize 
our loss, happy however in their gain. 


And now to come bo the detail in our business, which is our daily work. 
We must again begin with the daily report. After this is received at the 
office the daily report should be checked as to form and rate. It should be 
examined carefully and all answers to questions carefully read. I am now 
presuming that all questions are answered. It is then usually entered in 
the register or other books kept for that purpose and thereafter placed in 
the maps ; and the manager should, to my mind, inspect the maps with the 
report, for how else does he know how the particular risk is situated? 
Mapping of lines should have the utmost care, for carelessness upon the 
part of an employee in mapping a risk may prove very serious to a company, 
and I have known some offices that have suffered severely through such 
carelessness. I believe therefore that each office should keep a block book 
or location book, wiierein such risks are registered, and that this blocking 
should be done by some one other than the map clerk, so that a mistake 
made by the map clerk might be caught up by the blocking clerk. 

The use of the mercantile reports and of Hine's Record have proved of 
great value in many cases. I believe that one should obtain all the informa- 
tion possible both as to the assured and the property covered, and nothing 
short of this should satisfy the underwriter. 

Endorsements also should be given as much attention as the daily 
report. They are often too hurriedly passed, and many times a risk is 
entirely changed by endorsement. Vacancy permits are given, changes 
made, and the hazard often increased, and care should be taken to look care- 
fully at the endorsements, and the endorsement clerk should be a man of 
some thought, so that should the manager, by inadvertence — managers 
never make mistakes, you know — allow an endorsement of importance to 
pass through his hands, the endorsement clerk would stop it and bring the 
same to the manager's notice. 

Losses will come, of course, and these are placed in the hands of our 
special agents or of independent adjusters. When the proofs are returned 
they should be checked carefully, and I presume they are in most instances, 
for the manager should endeavor as much as possible to assist his special 
agent in every way, and what can one do more to assist than by critically 
examining the work of the special agent ? The independent adjuster is 
usually a graduate, and to say anything to him would be like gilding 
refined gold. He, like the manager, never makes mistakes— but should he, 
did you ever notice how modestly he admits it 2 

Abstracts of all policies written are sent to the home offices, and so are 
the endorsements. These are sent weekly, by some, monthly by others. 
Accounts to the home offices with vouchers go forward at regular intervals, 
and day after day, week after week, month after month, year after year, 
this detail work goes on. 

It is of course the manager's duty to create, direct and advise, and to 
decide upon all matters of importance or of interest to his company ; but at 
the same time it is his duty to watch the detail of his office, and he should 


be in touch with all the departments of his office. It is of course necessary 
that he should trust something to others, but he should always be cogni- 
zant of what is going on. 

I fear, gentlemen, I have tired you ; my remarks have been somewhat 
of a rambling nature, and I have touched upon the different subjects as I 
went along, and have not attempted to cover all the detail work, but have 
merely tried to give you a little practical talk. If it has interested you in 
the least I will be gratified. Mr. President and gentlemen, I thank you 
for your kind attention. 


(Applause. ) 

The Chairman — No one can question the value of Mr. Devlin's 
remarks, and I trust that the field men especially among us will take 
good heed of the suggestions in regard to inspections, and to requir- 
ing and insisting upon the information required by the daily reports. 
I do not know whether Mr. Devlin's remarks need any further dis- 
cussion, as I think they meet with the hearty co-operation of 
all of us. 

Mr. H. M. Grant — I think a great deal may be said upon that 
subject, and if I had the fluency of Mr. Devlin, I would like to say 
much upon the necessity of the requirements of answers to questions 
upon daily reports or application. He has said that many specials 
have said to agents that it did not matter about the questions. I 
can hardly conceive of that being done, and I can hardly conceive of 
any office sanctioning such action on the part of the special. Doubt- 
less it has spread to a greater or less degree. I do think it should 
be the duty of the special to impress the local agent with the 
importance of the requirements of those answers. As Mr. Devlin 
said, they are not put there to furnish work for the printer. They 
are prepared with a great deal of care. Many of them are prepared 
in the offices here, many of them are prepared from forms required 
by the parent offices, and they call for information which is abso- 
lutely necessary, especially in the matter of values and mortgages, 
and general conditions as to the risk, by which the manager is 
enabled to properly pass upon its eligibility. It is a most important 
thing. In many forms the questions required to be answered 


embrace an agreement to be signed by the applicant that the 
answers are true. Oftentimes there have been misrepresentations in 
the answers given, which have their bearing upon a loss. It could 
certainly benefit the business to a very great degree, if this were 
carefully attended to. The managers are themselves, doubtless, at 
fault, that they are not more generally and more fully required. Of 
course it does make a difference with a company, that it does insist 
upon the absolute compliance with these requirements, while others 
do not, and some are especially insistent upon ^that matter. The 
requirement should not be confined to the smaller agencies, as to 
daily reports in their districts, in their own towns and neighboring 
towns. There is no good reason why the best agent in the best 
towns should not furnish his office with every particular queried 
upon in the risk. The special may feel that he does his company 
good service when he presents to the agent the importance of 
this thing. 

Mr. Kinne — While it is very important, this matter of queries on 
daily reports not being replied to, is mostly due to ourselves. The 
insurance business is a law of general average, and everything com- 
pensates. We have special agents sent out into the field, where all 
the risks, even in the smaller towns are rated by schedule, or 
mapped by the companies, and that seems to fill the bill in the minds 
of some. The agent don't care anything about it, and we do not 
seem to care. The map is there and it is supposed to be correct, and 
the agents are instructed by this very method of procedure not to 
do anything, as it should be practically required of the local agent. 
That is one of the places where dust is thrown in our local agent's 
eyes. It seems to me we have got to take the thick with the thin. 
I was once talking about a new agent in a certain place, and inter- 
viewed the same man that a special agent had (which special agent 
now holds a position in a leading company), and I ascertained, after 
concluding to appoint him an agent, that he was told by his other 
special that there was no earthly use of making the replies. There 
was no map in that town. That was their idea, that they need not 
carry out the principle of replies to questions. If we could break 


away from those improper methods it would be a good idea; but as 
long as there are those who are willing to accept such applications 
we cannot escape from it. The good old days are the best, but not 
practical like many other things in this world. 

Mr. Smalley — Talking of daily reports, I wish to make one sug- 
gestion to the managers. On the back of the report is this question: 
'•Does this building stand on leased ground? '' Some of them stop 
there, and some go further and say, "If so, how long is it to run? " 
Some agents put in " Yes, " and nothing more. On coming to adjust 
it I see that it is on leased ground, and I find out nothing about it. 
I have to wire the company to learn whether that is true or not. 
before making my adjustment. It seems to me if the daily report 
was handed to us for use, it should be endorsed upon the policy, and 
it would save a great deal of time. 

In following out the ideas of endorsement, T want to relate an 
experience. I was one time representing a company in the East, 
whose home office was famed for its close and careful attention to 
detail business. It was almost an impossibility for anything to go 
wrong in the office. It had a prohibited list, and on that list was 
' 4 planing-mills. " The company would not take planing-mills on 
any consideration whatever. I had an agent up in the woods in 
Michigan who tried very hard to get us to take those risks, but the 
company would not do it. On returning to the office, after about 
six months' absence, I found a policy insuring five thousand dollars 
on a steam carpenter-shop. I looked it over, and down at the bottom 
was half an inch of endorsements pasted on. The first one was. 
"Permission is hereby given to operate a small saw.'" I turned that 
over, and I found another endorsement dated two or three days after 
that, reading, "Permission is hereby given to operate a small 
planer:*' and there were five or six endorsements on. that made that 
a full fledged planing-mill. They had gone through that office, and 
the company was carrying the risk. This matter had escaped the 
attention of the office. 

Mr. Edwards — The gentleman lays great stress upon the efficiency 
of the special, in looking after and seeing that questions on applica- 


tions and daily reports are properly answered by agents. When 
instructing the agents in the performance of their duties, Mr. Grant 
follows it up in the same strain, laying great stress upon the impor- 
tance of the poor devil of a special performing some of the duties 
that he, as manager, required. Mr. Devlin and Mr. Grant, and all 
managers, send their special agent out with the expectation that 
he will secure as much business from the agency as any other com- 
pany in that agency, and if he does not get his good share of that 
business he is hauled over the coals, very unceremoniously, and 
slapped pretty hard. The special agent knows what his manager 
wants him to do. He wants him to get business. He visits an 
agency, and he soliloquizes, "How can I best get business out of 
this agency? By inducing him to give it to me with the least 
requirement, making it easy for him to give it to me." It is one of 
the points that the manager leaves open; and if he wants those ques- 
tions answered as they should be, let him demand and require of the 
local agent that he should answer those questions, and not throw 
the responsibility on the poor special, who has enough to do. 

Mr. Geo. D. Dornin — I think this paper of Mr. Devlin's has struck 
a very sensitive chord. The responses would seem to indicate that 
we need a paper on instructions to managers, rather than to special 
agents. Colonel Kinne has rather taken my speech out of my mouth, 
because I had it in my mind to say that the work of the special 
agent was instructive to himself and to the local agent, some years 
ago. He had no maps to fall back on, and he had to make maps as 
he went along. He had no tariff rates to fall back on, and he had to 
make tariff rates. He had no instruction book to fall back upon, 
and he had, under the instructions from the general office, to 
instruct the agents. But beyond all that, the necessity of making 
maps made individual inspection necessary, and thus he became 
familiar with the hazard. It did not always follow that his judg- 
ment was good on certain risks because I know of my own certain 
knowledge that there are many risks now standing, which I rejected 
when I was in the special line thirty years ago. Some years ago, I 


had associated with me a gentleman whom you all know, who was 
one of the best specials in the field then. The agents had a great 
deal of confidence in him, and when our enquiry went out it would 
comeback, with the reply, ,; Sexton knows." It is a little embar- 
rassing, however, especially when we are reporting to a foreign 
office, who have a fashion of sending in query sheets from time to 
time asking very absurd inquiries, that the only reply we could 
make is, "Sexton knows." I sincerely think that instead of get- 
ting out in the field and giving merely the alleged managers instruc- 
tions, that they must get the business, and we will sort it out. We 
should operate from the point of view that some of the risks must be 
rejected, and in order to have an intimate knowledge we want all 
the questions answ r ered. I really believe that the special will make 
himself more solid with the agent if, instead of the slipshod way, he 
should insist upon it that the agent must give the company all the 
knowledge that he has. In that way he saves the irritating corre- 
spondence that is bound to follow. The agent does not like to 
answer any more questions than he can help. I think that is the 
way to make the agent more effective. I think that the office that 
insists on regular accounts is the one that his agents will tie to. I 
think we all find at some time or other that we have an agent going 
wrong, and he holds the manager responsible for permitting him to 
get into this condition, and he can say. "If the manager had 
insisted upon it, I would not have gotten into this box. 

Mr. Sexton — The agents and specials make the losses, and the 
agents and the stockholders pay them. Formerly the agents furn- 
ished the money, but now the stockholders are liable. I intended to 
keep out of this discussion, but I do not propose to be blamed for the 
negligence of agents answering questions on daily reports. While I 
have nothing to do with the business, I have a good many losses to 
look after, and I often find a contract that the company did not 
make, that the agent did not make, but that we are held for. In 
the case of the endorsement ' ; carpenter shop with steam power." 
we have to settle these questions when they come up. The assured 
must have his pay whether he has paid for the insurance or not. 


Some years ago, when I first started out, I had two ideas; one 
was that the Fireman's Fund was the only company that paid its 
losses in Chicago. The other one was that it was the law of the 
State that a man should not get insurance for more than three 
quarters of the value of his property; that he should not have a 
policy until every question on the application had been answered 
and he had signed it. I soon got over that. One day I found in the 
office an application in pencil brought in by a broker, on a piece of 
property in South San Francisco, and it went through. On hunting 
up the matter, I found that the brokers in the city were thoroughly 
responsible for anything they brought in, and it was not necessary 
to know whether it was on leased ground or anything about it, 
because it was under the supervision of the manager, although the 
manager would not know the broker if he met him on the street. 
Next I learned that this extended to Oakland under certain con- 
ditions. Then it went to San Jose, then it went outside, and they 
said it was not necessary because we have maps now, and know all 
about the risks. The Sanborn map man made the diagram for the 
agent, the forms of policy were made and printed at the home office 
and the special became a soliciting agent again, and his business, as 
Mr. Edwards said, was to put the least work he could on the agent, 
and by treating the assured, and writing policies for and fixing up 
his agent's account, and allowing him a little extra commission, pay- 
ing hotel bills, etc., get more business for his company. 

I speak on this subject from a disinterested standpoint, and I find 
that the whole fault lies with the offices in not commencing right at 
home in having the questions answered. 

Mr. George F. Grant — On the point concerning inspection slips, 
which one gentleman said would be wise to have made in the office, 
my own experience has been that it is wiser to make your own inspec- 
tion slips from the register of the agent. There is one thing you 
cannot miss, and that is the manner in which he has put the form of 
the policy on the register. If he has made mistakes in the daily 
report your inspection slips will possibly catch it. Following it, it 


must furnish you with the name of the insured, the property of 
the insured, and smaller details. If you have a good memory, in 
making inspections, year after year, you become as familiar with 
those risks as you are with any of your household effects. Now 
the point I wish to make is that by filling out the inspection slips 
you prevent any possible error as to amounts or locations or rates, 
and I wish to say that you correct the error the agent may have 
made by making them out yourself. 

Mr. Spinney — I am in favor of having the inspection slips sent 
from the San Francisco office, and the special can check them from 
the local's register. In the larger agencies only a general register 
is used for all companies, and the local does not wish a special to 
pore over a register that contains records of other companies; hence 
he, the local, has to call off the risks, which not only takes up his 
time, but if he misses a risk, intentionally or otherwise, the special 
probably leaves towm without inspection of just the risk that should 
be inspected. 

I had such a case in one of the larger California towns. A fire 
was reported, and being on the spot, I adjusted the loss for the 
companies interested. The building was formally used as an ice house, 
but at the time of fire was so dilapidated that it had only been used 
occasionally for storage purposes. Upon arriving at San Francisco 
and giving my report, the offices of the companies interested looked 
up their daily report to see what their specials had thought of the 
risk. Their was no inspection slip whatever in either office, although 
all other risks had been reported upon. Had the slips been sent 
from the San Francisco office this risk would not have passed. 

Press copies of correspondence passed through the special's field 
would assist him in his duties, and relieve him of being compelled to 
ask agents if there were matters which the home office had asked to 
have adjusted. 

The Chairman — I am very glad that the subject of Mr. Devlin's 
talk has excited so much discussion. 


We will now proceed with the Reports of Committees. 1st: 
''Adjusters' Charges and Contributions Thereto," by C. Mason 

To the Fire Underwriters' Association of the Pacific: 
Gentlemen :— 

It having become quite evident that the present rules concerning 
adjusters' charges and contribution from companies interested were either 
so faulty in construction or intention as to be improperly understood or 
applied, the Fire Underwriters' Association of the Pacific, after some dis- 
cussion of the subject, recently appointed a committee, consisting of C. 
Mason Kinne, Calvert Meade and F. G. Argall, to formulate and present a 
more equitable and satisfactory rule that might meet with the approval of 
the Association. 

The committee gave the subject careful and earnest attention, sought 
the ideas of many others, and finally decided to present the one accompany- 
ing this report to the Association at its last monthly meeting, where it was 
discussed at some length and finally unanimously adopted as the sense of 
the meeting, the same to be amplified by the committee and submitted to 
the members of the Association at this annual meeting. 

Rules are made for the same purpose that contracts are put in writing 
and signed by the parties at interest, in order that there may be no misun- 
derstanding as to the intentions of the makers thereof. 

We think that the main principle of the rule now submitted is evident 
to all of you, and it is hoped that it is so phrased that there can be no mis- 
understanding as to its intention and honest application. 

Your committee does not propose to give any argument as to its merits 
in this brief report, but if explanations are needed or examples as to its 
application are desired the committee is ready and willing to accommodate 
those asking for light. 

We hope that this rule may meet with the approval and final ratifica- 
tion of those assembled. 




San Francisco, February 19th, 1896. 

Mr. Kinne — The rule is in your hands. Perhaps it might be well 
for me to read it, because sometimes a thing sounds different when 
heard read. 

(Mr. Kinne then read the proposed amendment to the rules. ) 




Where no special agreement exists, the minimum charge for adjusting 
losses shall be #15 per diem and expenses — expenses being understood to 
include traveling, hotel and necessary incidental disbursements. 


An adjuster shall be paid by the company or companies employing him. 
his per diem and expenses from the point where his employment takes 
effect to the point of loss, and thence to his home city, or to the point on his 
direct route where he is diverted and (or) employed by another company or 
other companies. From any point where he is so diverted and (or) employed, 
such other company or companies shall bear his per diem and expenses to 
his home city, or to the point on his direct route where he is again diverted 
and (or) employed by any other company or companies. The company or 
companies last employing him shall bear his per diem and expenses from 
the point where such employment takes effect to his home city. 

As between companies interested in losses occurring by same fire and 
employing same adjuster, the basis of apportionment of general expense 
shall be the amounts at risk; and such companies shall pro rate in general 
expense, whether their instructions to adjust be given simultaneously or 

Provided, however, that incidental losses, under short form proofs, shall 
not necessarily contribute proportionately to general expense, but shall, at 
discretion of adjuster, bear a special adjusting fee, amount of said fee to be 
deducted from general expense before apportionment of the latter and to 
appear on adjuster's bill. 


Special expense on each loss shall be charged by adjuster in accordance 
w^ith time engaged and (or) special charges incurred, apportioned pro rata 
among the companies interested, the basis of apportionment being the 
amounts at risk. 


The foregoing rules shall apply to a special agent while employed as an 
adjuster. His employment shall take effect at the point where he is 
diverted from his special-trip route, said point to be considered as his home 
city. His employment shall cease either on return to said point, or at the 
point where he resumes or takes up special work, or at the point where he 
diverges from the most direct route from last point of loss to said home 
city. The company or companies last employing him on a continuous ad- 
justing trip shall bear his per diem and expenses from the point where such 
employment takes effect to said home city. 

The Chairman — Gentlemen, you have heard the report of the 
committee. What is your pleasure in the matter ? 


(The report was then on motion, duly seconded, and without dis- 
cussion, unanimously adopted.) 

The Chairman — The next will be the report of the Committee on 
Mortgage Clause. Mr. Lowden, the chairman of the committee, is 
not present. 

Mr. Sexton — I have a minority report. 

The Chairman — As some of the reports are not ready, I suggest 
that we hear the paper by Mr. Sewell. 

(Mr. Amos F. Sewell read his paper, entitled "Advertising," 
which was received with loud applause. ) 


It may first appear that my theme is more in the line of a man in charge 
of the advertising columns of a journal or publication, but when we come to 
think of it, we discover that advertising is the paramount factor of an 
insurance man's daily occupation, the very essence of his business life. 
We endeavor to promote the interests we represent by placing them before 
the public in a favorable light; we are advertising them. Many of us per- 
haps do it unconsciously and think other motives prompt particular acts 
which will please others. We may allow ourselves to be deceived by the 
impression that it is generosity, but it is not ; we are all selfish. It is an 
inborn desire to ad\ertise ourselves or what we represent. The intending 
purchaser of any article or commodity is shown the goods themselves or a 
sample of them. They are brought forth for his inspection and he selects 
that most pleasing to the eye, either in beauty or a durable point of view. 
The goods are there and speak for themselves ; they are in a great measure 
self-advertising. To our prospective customer we can display no goods or 
samples, but we may show him something printed on paper, and for the rest 
we must depend upon the tongue, an insurance man's great advertising 
medium. A deaf and dumb man might become a successful shop-keeper by 
offering choice wares and marking his price upon them in plain figures, but 
fancy him engaged in the insurance business. 


Do we all advertise to the best advantage? " I think not." Years ago, 
further back than I can remember, it became the custom for insurance com- 
panies to furnish blotting pads and calendars to their agents for free 
distribution ; subsequently, with liberal enterprise many companies got out 
rulers, memoranda books, paper weights, paper cutters, tape measures, 
yard measures, maps, money purses, pocket books, stamp cases, etc., 
besides an almost endless variety of printed matter, cards, leaflets and 


pamphlets, showing not only the financial condition of the company, but 
telling us how to cure mumps and measels, ingrowing nails, remove grease 
spots and play Hoyle whist. All intended to stimulate business, and they 
do stimulate it — with our printers. Every field man knows that tons of 
this printed stuff is annually wasted and destroyed in the offices of Pacific 
Coast local agents alone. 

If some observing chap would make an estimate of the yearly cost of so- 
called advertising matter sent out by insurance companies, and classify the 
effective and ineffective, I am sure the figures on the latter would be a 
revelation. Almost any of our field men could make such an estimate, and 
a fairly accurate one, without much trouble. Why should insurance com- 
panies furnish 98% of all the blotting pads used in the United States, and 
75% of the calendars ? You may be inclined to answer that question in my 
own line of argument, because ours is a business that must be extensively 
advertised, but do these things accomplish the purpose ? Possibly, in a 
way. I believe, however, we can attain better results with less money. 

Can you tell whose blotter you last used outside your own office (where 
you have only your own), or whose calendar you referred to in looking up 
the date? "No!" well, neither can any one of the next five thousand 
people you see. I grant that a blotting pad is an inexpensive thing, but we 
get them out in such great quantities that the aggregate cost is enormous. 
Calendars produced in San Francisco average, about 840 per thousand, and 
I should say not less than 750,000 are annually distributed on the Coast by 
insurance companies. There is an item of $30,000, and 50% of it goes to 
decorate scrap albums. They cut away all traces of advertisement, you 
know, before they paste the picture in. No wonder the public think insur- 
ance companies have "money to burn," when they practice such 


There is another custom I want to see abolished, that of sending tin 
signs to our agents. They look very fine in the supply room, w T ith their 
gilt letters and glossy surface, but after a few weeks' exposure to the 
weather they look measley. "Measley " is just the word to express it ! I 
was talking insurance to a farmer in a small interior town one day last 
summer, when he interrupted me, and pointing across the street to a 
weather-worn tin sign nailed on the front of a building, said, "Say*, part- 
ner, does an insurance company with such a looking sign as that pay its 
losses in good money?" I told him it did, but I had to admit that the 
appearance of the sign was sufficient to create a doubt in the matter. Many 
of you have, no doubt, heard of the agent up on Sutter Creek, who covered 
his wooden office building with the tin signs of companies he represented, 
and then applied to the Pacific Insurance Union for a reduction of rate on 
the grounds that his was a tin-clad building. I think he got the redu